U.S. Sales Soar 48%, Led by Rate-Tied Notes

Sales of structured notes in the U.S. rose 48 percent in August, led by a doubling of issuance of securities tied to interest rates, as investors look for alternatives to Treasuries paying close to historic lows.

Interest-rate securities accounted for $782.9 million of structured notes sold in August, or 23 percent of the total $3.46 billion, according to data compiled by Bloomberg. That compares with $325.8 million in July and was the highest percentage of the overall since August of 2011.

The Federal Reserve has said since January that it plans to hold its benchmark borrowing costs “exceptionally low” through at least late 2014, and four Fed presidents have come out in favor of an open-ended strategy for bond buying. With short-term rates being held between zero and 0.25 percent, investors bought $323.4 million of structured notes last month where coupons increase over the life of the security to as much as 9 percent.

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