Citigroup sells $50 mn notes linked to rupee

Citigroup issued $50 million of structured notes tied to the exchange rate between the US dollar and the rupee.

The offering is the biggest sale of structured notes tied to exchange rates in the US since March, according to data compiled by Bloomberg. The six-month securities pay 5.7 per cent annualised interest, with principal returned at maturity as long as the dollar was worth no more than Rs 46.2, according to a prospectus filed yesterday with the US Securities and Exchange Commission.

On March 25, the Bank of America sold $76.3 million of notes which rise in value if the Brazilian real and Mexican peso climb against the euro, the biggest currency-linked offering in the US this year, Bloomberg data show.

If the dollar climbed above Rs 46.2, investors in the notes may lose money, the New York-based bank said. Yesterday, the rupee fell 0.2 per cent to 45.32 a dollar, Bloomberg data show.

Structured notes are securities created by banks, which package debt with derivatives to offer customised bets to investors while earning fee and raising money. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.