US Wrap: JP Morgan offers investors the lesser option

JP Morgan has launched a three-year kick out note which pays investors the lesser performance of the S&P 500 or Russell 2000 index if it does not autocall. The Lesser Performing Index Single Review note includes just one observation date 12 months into the product term, at which point it will mature with a 70-75% return if both indexes are at or above their initial level. If not, investors are fully exposed to the downside performance of the lesser performer at maturity, with no potential for additional returns in the intervening two years.

The note was one of only five launched into the US market over the past two days, in what is unfolding as a slow week for issuance. In the same period, both Wachovia and Natixis have opted for the external credit of Eksportfinans to back their products. The latter warily issued a single reverse convertible linked to JP Morgan, while Wachovia launched a slightly more adventurous accelerated growth note linked to an international equity fund.

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