The strength was in the numbers in some of the world’s largest structured product markets.
Citi replaced Barclays as the number one issuer group in the first half of 2022 in the US. Some US$49.1 billion was collected from 16,324 structured products in the first half of 2022 – a five percent decrease in sales volumes compared to the prior year semester (H1 2021: US$15.6 billion from 15,831).
Average sales volumes stood at US$3m, slightly down on H1 2021 (US$3.3m). Seventeen issuer groups were active in the semester – they were mixture of US, Canadian and European investment banks. Citi was the most prolific provider during the semester, capturing a 15.1% share of the US market with sales of US$7.4 billion from 2,561 products (H1 2021: US$6.1 billion from 1,893 products).
Over in Europe, structures in France continue to dominate the ranking while index underlying assets stand out led by one with ESG filters. Corralium Santé, issued by Natixis, is an eight-year insurance policy on the MSCI World Health Care Select ESG Top 50 5% Decrement Index. It topped the best-selling structured product league table in European markets in the first half of 2022. With a strike date of 20 June, the autocall note will terminate offering a capital return of 100% plus a specific coupon if the ESG index is equal or above its initial level on any observation date. Otherwise at maturity, the product will offer a 154% capital payout as long as the final index level is above its initial level.
Barclays will begin to buy back approximately US$14.8 billion structured notes and US$2.8 billion of exchange-traded notes (ETNs). The products were issued in excess of what it had registered on Form F-3 filed with the SEC on 23 May 2022. The UK bank expects to commence the proposed rescission offer on 1 August, which will be open till 12 September. On 28 March, Barclays announced it expected a £450 million (US$591 million) loss and would delay a share buyback after mistakenly issuing the notes worth US$17.6 billion in total.
Friday 22 July was the first trading day of the newly-launched CSI 1000 futures and options on the China Financial Futures Exchange, the fifth listing of index derivative products in the country. The futures made up of four contracts delivered a traded volume of CNY50.5 billion (US$7.5 billion) while the options of CNY278.4m on the day.
On the product side of things, Meleleo Consulting has collaborated with Société Générale for the launch of Pension Invest Certificate 2022 III in Switzerland. The 10-year product offers 95% capital protection and is linked to the shares of Nestlé, Novartis, Roche, Swisscom and Swiss Re. Every year, the certificate returns 9.5% of the nominal invested to the investor. In addition, it offers an annual memory coupon of two percent if all shares close at or above their respective starting levels on the validation date. The coupon is calculated on 100% of the nominal invested.
The UK structured product market has shown strong growth in the last two years as world economies and stock markets have recovered from the effects of the pandemic. March 2020 saw severe market falls, a sudden shift to remote working and both of which caused product issuance to be drastically hit for many months as investment banks needed to manage the risk caused by market falls, volatility spikes and dividend forecasts slashed as companies held on to cash to boost balance sheets.
There has been growth in the market since that point, with 2022 projected to have the largest number of structured products issued in the UK market. This would take it past the previous record year of 2018.
The list of banks across the two time periods shows mostly the same universe with Barclays the most significant climber in recent years. This is despite the effect of their recent widely reported decision to temporarily stop product issuance worldwide to comply with US regulatory issuance limits.
The biggest absentee today is undoubtedly Investec. Investec had entered the market in 2008 and redefined the way that structured products were issued in the UK. Despite being a smaller bank in global terms and with a low credit rating it achieved enormous success particularly in the deposit sector of the market.
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