Bellwether stock SoftBank has brought single share underlyings to the forefront in Japan as volumes of structured products in the retail arena linked to SoftBank stock have increased by more than 16 times so far this year with respect to sales volumes seen last year.
Providers in Japan have stepped up the issuance of Softbank-linked products as a result of strong demand. A senior source from a local securities company told SRP that the stock's popularity was driven by the expected increase in long-term shareholder value as a result of the recent acquisition of US telecommunications holdings company, Sprint.
"The high volatility surrounding telecommunications companies made it possible for providers to compete with attractive coupons," said the source. Coupon rates for the 11 Softbank-linked products registered in SRP's Japanese database so far this year range from 6.5% to 10.9%, with the average coupon being 7.8%.
Regarding future prospects, the source said "I don't think that there will be a dramatic issuance boost in new SoftBank-linked products moving forward unless the existing products eventually knock out and provide room for rollover opportunities."
The 11 products are worth $167.6m. During the whole of 2012, only two such products were launched: EB SoftB M20120920 from SMBC Friend Securities worth $10.2m and EB Softbank M201311128 from Kazaka Securities worth $5.1m. The number of single share-linked products so far this year has risen to 184 products with sales of $2.99bn, surpassing last year's figure of $2.245bn.
SoftBank is a Japanese-based telecommunications and internet company. With its recent acquisition, it is now the world's third largest telephone company in terms of subscribers. The company's share price - which reached its lowest level of the year of 2,882 yen in January and its highest of 7,010 yen in July - experienced a 243% increase in just six months.