U.S. sales of structured notes linked to General Electric Corp. climbed to the highest level in seven months after the company’s stock reached a more than one- year high at the end of June.
Banks have already sold $50.2 million of securities tied to the world’s largest jet-engine maker in six deals this month, the most since $150 million of issuance in December, according to data compiled by Bloomberg. The Fairfield, Connecticut-based company is the second-most commonly linked single stock for U.S. notes this year, trailing Apple Inc.
GE reported earnings today that topped analysts’ second- quarter estimates, as profit growth at the finance and energy units overcame a drop in wind-turbine orders. The company gained 0.8 percent to $19.96 at 11:06 a.m. in New York. The shares, which closed on June 29 at $20.84, the highest since Feb. 28, 2011, advanced 11 percent this year before today’s earnings, compared with a 9.5 percent gain for the Standard & Poor’s 500 index.
Barclays Plc issued $21.3 million of three-year notes on July 13, the largest deal tied to the company this month, Bloomberg data show. The securities are called on quarterly dates if the stock price exceeds its initial value, and yield 2.66 percent for each period GE doesn’t fall by more than 25 percent, with investors risking their principal, according to a prospectus filed with the U.S. Securities and Exchange Commission. Morgan Stanley distributed the notes for a 2.25 percent commission.
Structured notes are securities created by banks, which package debt with derivatives to offer customized bets to investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.
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