After being split off from eBay and its stock debut, PayPal provided a new opportunity for structured investments. Various structured products were issued with the digital payment platform as an underlying hours after its successful debut on Nasdaq.
Commerzbank issued unlimited turbo certificates that provide a return equivalent to a leveraged short/long position in PayPal shares. The product can reach an adjustable knockout level, which returns the original investment less the loss at that time. HSBC also launched Open End-Turbo-Optionsscheine with a similar structure.
Leonteq Securities was first in respect of non-flow products, issuing two callable barrier reverse convertibles. The products pay a guaranteed coupon of 8.00% pa for Swiss franc-based deals and 9.00% pa for US dollar-denominated products. The coupon will be paid every three months. “In addition, Leonteq has the right, but not the obligation, to call the product after six, nine and 12 months at 100% plus coupon,” said Manuel Dürr (pictured), head of public solutions at Leonteq. “The barrier is observed continuously and offers downside protection against smaller price declines,” he said.
Finally, BNP Paribas issued a series of mini long and UniCredit Bank also issued mini future bear/bulls.
After the separation, Vontobel launched some eBay-related Bonus Cap-Certificates that offer 100% capital back plus a predetermined bonus at maturity if the underlying is never equal to or below a set barrier. Otherwise, the product offers 100% of the rise in eBay, up to a predefined cap.
PayPal started trading on July 20 with a market capitalisation of about $47bn, while eBay shrank to about $34bn. The initial offering was priced at $38 per share and closed up approximately 5% on launch.
PayPal was previously listed on Nasdaq under the same ticker symbol “PYPL” before it was acquired for $1.5bn in 2002 by eBay. Under the terms of the separation, stockholders who held eBay common stock on the record date (July 8, 2015) received a distribution of one PayPal common share for every one share of eBay common stock held as of that date. No fractional shares of PayPal were distributed.