Barclays launches three iPath Exchange-Traded Notes linked to foreign exchange rates

By Sheri Kasprzak

New York, April 12 - Barclays Bank plc again stole structured products headlines with its iPath Exchange-Traded Notes, this time launching its first-ever ETNs linked to foreign exchange rates.

The investment bank plans to sell zero-coupon ETNs linked to the euro/U.S. dollar exchange rate, the British pound/U.S. dollar exchange rate and the Japanese yen/U.S. dollar exchange rate.

Representatives from Barclays did not immediately respond to requests for comment on the FX-linked notes.

However, the notes sparked some conversation within the structured products community.

"You don't branch into something unless you think it's going to be profitable," noted a market insider. "I'm sure they're receiving a lot of demand."

Terms of the notes

In the euro/U.S. dollar exchange rate-linked ETNs, the investors will receive a cash payment equal to the principal times the index factor on the valuation date minus the investor fee, if the notes are held until maturity.

The valuation date on the notes will be each Thursday from 2007 through 2037 over the life of the notes. The index factor will be the change in the exchange rate less the deposit rate of the European Overnight Index Average minus 25 basis points.

The investor fee is an annual rate of 40 bps.

Other ETNs

The payout terms on the British pound/U.S. dollar- and Japanese yen/U.S. dollar-linked exchange traded notes are the same as the euro/U.S. dollar-linked ETNs.

News of the foreign exchange rate-linked offerings comes just days after Barclays announced another $500 million add-on to its previously announced iPath ETNs linked to the Dow Jones - AIG Commodity Index Total Return.

The latest add-on brings to $2 billion the total notes linked to that index sold so far.

Commodities getting more popular

Elsewhere in the market, an equity structure said commodities continue to get a shot in the arm.

"Commodities are strong now and investors are looking to buy," he said. "I'm expecting tons more [structured products offerings linked to commodities]."

Issuer AB Svensk Exportkredit announced that Goldman, Sachs & Co. arranged a $3 million issue of total return linked notes due April 28, 2008 tied to the Goldman Sachs Commodity index - Total Return.

Interest will Libor minus 30 basis points and will be payable quarterly.

The payout at maturity will be par plus triple the positive or negative return on the index, less 3% for fees and less the 91-day Treasury bill yield.

The notes will be called if the index hits 88% of the initial index level.

Holders can put the notes back at any time and receive a payout calculated in the same way as that at maturity.

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