S&P 500-Linked Note Sales Climb to Record

Sales of structured notes tied to the Standard & Poor’s 500 Index have surged 48 percent to a record this year even as overall issuance dropped.

Banks have sold $5.77 billion of the securities tied to the benchmark, up from $3.89 billion a year earlier, according to data compiled by Bloomberg. Almost 60 percent of all notes issued through July 13 have been tied to the gauge, the highest level since at least January 2010, Bloomberg data show.

Lower interest rates have made for less compelling features on notes that promise a return of principal, so more investors are buying securities that don’t make such guarantees, such as certain products tied to equities, said Deryk Rhodes, vice president of structured products trading at Incapital LLC in Boca Raton, Florida. Notes linked to interest rates, which generally return principal, have plunged 36 percent this year, while overall sales slumped 18 percent to $21.5 billion.

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