Coping with collapse

The demise of Lehman Brothers spelled potential disaster for the US market. Reverse convertibles have sunk on the back of falling equity markets, fear of structured products is spreading like wildfire in the wake of negative media coverage, and a hoped-for tax boost for principal-protected investments has been shelved. Can structurers and distributors find opportunities in the rubble? Sophia Morrell reports

At the beginning of the year, industry participants were delighted when structured products issuance in the US for 2007 was measured at $114 billion by the US Structured Products Association, a rise of 78% on the previous year. The critical mass that the industry had been waiting for had finally been achieved, overcoming traditional obstacles such as investors' predilection for mutual funds, the punitive tax treatment of principal-protected products (PPNs) and widespread nervousness about