JPMorgan is set to price tomorrow what appears to be its first structured note to be linked exclusively to platinum. The 13-month quarterly review note can be called quarterly, by the issuer and features a -10% soft protection. If the price falls below -10% and has not yet been called, investors will lose 1.111% in principal for every one percent decline.
Although JPMorgan has included platinum in baskets alongside other commodities in previous notes, the current issue, which appears to be structured for a private client, is the first time it has used the metal on its own.
While the price of platinum traded in the $800 to $900 range per troy ounce in 2005, it spiked to a high of over $2,200 per ounce in mid-2008 before falling precipitously back to the $750 range in late 2008. The price has been climbing back ever since and traded at $1,541 on 17 August 2010, according to JPMorgan.
Platinum-only structured notes are rare in the US with Bank of America pioneering an issue in March, raising more than $63.5m.
Within the last several months both Barclays Capital and JPMorgan have both paired platinum with palladium for use in a bi-metal-linked basket. And last year, in 2009, both banks issued structured notes linked dually to platinum and copper.
In May, EverBank, included the metal in its MarketSafe certificates of deposit (CDs) with monthly offerings of a five-year diversified metal CD linked to gold, silver and platinum.
JPMorgan recently debuted another single commodity this year with its first cotton-linked note, which launched in May with a leverage factor of 2.5, a cap of between 25% and 35% and a 12-month tenor.
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