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http://www.businessweek.com/news/2013-05-14/goldman-sachs-sells-second-largest-callable-step-up-note-of-2013

Bloomberg News

Goldman Sachs Sells Second-Largest Callable Step-Up Note of 2013

May 14, 2013

Goldman Sachs Group Inc. (GS:US) sold $31 million of 15-year callable step-up notes, the second-largest such offering in the U.S. this year.

The securities, issued May 8, yield 3.25 percent for the first eight years, then increase five more times to 7.5 percent for the last year, according to a prospectus filed with the U.S. Securities and Exchange Commission. The New York bank and Incapital LLC distributed the notes for a 3.24 percent fee.

The bank has the option to call the notes quarterly starting Nov. 13, according to the prospectus.

Goldman Sachs sold $42 million of 15-year callable step-up notes in two related offerings on Feb. 19 and 25, the biggest such deal this year. The securities yield 3.5 percent annually for the first eight years, then increase four times to 7.5 percent during the last six months, according to a prospectus filed with the SEC.

Goldman Sachs has issued the most rate-tied notes in the U.S. this year, $418.9 million, according to data compiled by Bloomberg. The bank was also No. 1 for all of 2012, selling $1.14 billion of the securities.

Tiffany Galvin, a company spokeswoman, declined to comment.

Banks create structured notes by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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