The market rally this year is behind the triggering of automatic
redemptions occurring this Friday on two inverse iPath ETNs
canvassing broad U.S. equity markets that have fallen in value as
stocks have moved higher.
The ETNs' two prospectuses call for automatic redemptions when
the intraday indicative values of the notes fall below $10 a share.
The termination event occurred on Friday, Sept. 7, and the
redemptions will occur on Sept. 14, said Barclays Plc.
The two notes, the iPath Short Extended S&P 500 TR Index ETN
(NYSEArca:SFSA) and the iPath Short Extended Russell 1000 TR Index
ETN (NYSEArca:ROSA), both fell under that critical threshold on
Friday, Sept. 7, the bank said in two separate press releases.
The stock market has moved higher in fits and starts this year,
buoyed by solid corporate earnings in the U.S. and, more broadly,
by increasingly substantive commitments from eurozone policymakers
to keep the region's macroeconomic challenges from spiraling out of
control. As an example, the S&P 500 Index has climbed about 15
percent so far in 2012.
The two ETNs have meanwhile been falling sharply. SFSA, the
inverse S&P 500 note, has lost almost three-quarters of its
value this year, and is now at $9.93 a share, according to data on
Google Finance. ROSA, the Russell 1000-linked inverse note, has
fallen by two-thirds, and is now at $9.90 a share.
SFSA had $7.84 million in assets as of Sept. 11, while ROSA had
$1.41 million, according to data compiled by IndexUniverse.
In the redemptions, note holders of SFSA will receive $9.9312 a
share, while ROSA holders will receive $9.8168 a share, Barclays
Barclays said in the press release that further information on
the redemptions is available on its product website at
www.iPathETN.com, and it directed readers to sections that appear
under the heading "Specific Terms of the ETNs-Automatic Termination
Event." The releases were dated Sept. 7.
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