Barclays Bank PLC (“Barclays”) announced today a temporary
waiver of the minimum early redemption size of the iPath® Bloomberg
Natural Gas Subindex Total ReturnSM ETNs (“ETNs”) on the terms
described below. The ETNs trade on the NYSE Arca stock exchange
under the ticker symbol “GAZ”. The Index underlying the ETNs is the
Bloomberg Natural Gas Subindex Total ReturnSM (the "Index"), with
Bloomberg ticker BCOMNGTR. The ETNs will continue to be suspended,
until further notice, to any further issuances and sales from
inventory.
Barclays will waive the minimum early redemption size of 50,000
ETNs with respect to the valuation date occurring on each Wednesday
(or, if such calendar day is not a trading day, the trading day
immediately thereafter). The minimum early redemption size for any
other day of the month will be reduced to 5,000 ETNs from 50,000
ETNs. These changes will be effective after the close of trading on
March 9, 2017 and will be effective for the next three years ending
on and including March 9, 2020 unless extended by Barclays at its
sole discretion.
The obligation of Barclays to accept any early redemption of
ETNs is subject to the procedures set forth in the section
“Specific Terms of the ETNs—Early Redemption Procedures” in the
prospectus relating to the ETNs. These procedures include
delivering a notice of redemption and signed confirmation to
Barclays prior to the relevant valuation date within the time
frames set forth in the prospectus and instructing the DTC
custodian at which the ETNs are held to book and settle a delivery
vs. payment trade with respect to the ETNs.
Recently, a material premium has developed in the trading price
of the ETNs on the exchange in relation to their intraday
indicative value. From January 3, 2017 to March 7, 2017, the
closing indicative value (also referred to as the daily redemption
value) decreased by approximately 41% from $0.52 to $0.31 per ETN,
while the closing price of the ETNs on the exchange decreased by
only approximately 22% from $0.59 to $0.46 per ETN. The closing
price of the ETNs on the exchange as of March 7, 2017 reflected a
50% premium to the corresponding closing indicative value.
In addition, Barclays had announced investor guidance on
November 9, 2015 and December 22, 2015 regarding the decline in the
daily redemption value of the ETNs. The daily redemption value of
the ETNs on March 3, 2016 hit an all-time low of $0.13 per ETN. And
more recently on February 27, 2017, it hit another low of $0.25 per
ETN. From February 27, 2017, the daily redemption value of the ETNs
would drop to $0 if the Index decreases by another 23% from the
Index closing level on February 27, 2017. Additionally, as accrued
investor fees in the ETNs grow over time regardless of the
performance of the Index, the magnitude of the decrease in the
level of the Index required for the daily redemption value of the
ETNs to drop to $0 will also reduce progressively.
Barclays has also announced the listing of a new ETN (the “New
ETNs”) (Ticker: GAZB) linked to the same Index. The New ETNs will
offer a similar exposure as the existing ETNs (the “Old ETNs”), but
will include certain differences, including a reduced investor fee
and an issuer redemption feature. Please refer to the associated
press release for more details.
Holders of the Old ETNs that wish to sell their Old ETNs and/or
purchase New ETNs may take any of the following actions:
1) Sell Old ETNs and/or purchase New ETNs on the secondary
market at the prevailing trading price on the exchange;
2) Put Old ETNs to Barclays (including with respect to the
valuation date occurring on each Wednesday with reduced minimum
early redemption sizes) and simultaneously purchase New ETNs from
Barclays in an amount having an equal dollar value, with each
transaction having the same valuation date and settlement date (a
“Net Settlement”). In this case, upon redemption of its Old ETNs,
the holder would receive a number of New ETNs equal to the
aggregate daily redemption value of the redeemed Old ETNs, rounded
to the nearest full New ETN, with a residual cash payment for any
“partial” remaining ETNs. Holders who wish to effect a Net
Settlement must instruct their broker or other person through whom
they hold their Old ETNs in accordance with the prospectus for the
Old ETNs. Holders may also contact Barclays at
etndesk@barclays.com or 1-212-528-7990 to obtain further
information regarding the procedures for Net Settlement.
3) Put Old ETNs to Barclays under the early redemption option
without simultaneously purchasing New ETNs or purchase New ETNs
from Barclays without simultaneously redeeming Old ETNs, in each
case for the applicable cash value.
Any redemption of Old ETNs or sale of New ETNs is subject to the
conditions described in the prospectus for the relevant series of
ETNs and will be valued using the applicable daily redemption value
or closing indicative value on the valuation date for the
transaction, with no additional purchase or redemption fees, in
each case in accordance with the prospectus for the relevant series
of ETNs. Holders are not required to take any of the actions set
forth above and may choose to continue to hold their ETNs at any
time. Anyone considering investing in the ETNs or continuing to
hold the ETNs should consider the risks described in the prospectus
for the relevant series of ETNs when making an investment decision
and consult with their broker or financial adviser to evaluate
their investment in the ETNs.
The suspension of further sales and issuance may cause continued
fluctuations in the premium described above and in the trading
value of the ETNs if strong interest from exchange participants in
purchasing the ETNs continues. Investors should exercise extreme
caution before purchasing or selling ETNs at a market price that
reflects a premium over the intraday indicative value or daily
redemption value, as the case may be. Furthermore, investors
should not assume that the ETNs will continue to trade at a premium
in relation to their intraday indicative value or daily redemption
value, as the case may be. Any secondary market premium could
decrease, even significantly, or cease to exist entirely at any
time. The “intraday indicative value” of the ETNs is calculated
and published with a frequency of at least every 15 seconds
throughout the trading day, under the ticker symbol GAZ.IV. The
“daily redemption value” is the closing value of the ETNs
calculated by us on a daily basis and is used to determine the
payment at maturity or upon early redemption. As a result, if
investors purchase the ETNs at a price which reflects a premium
over the intraday indicative value or daily redemption value, as
the case may be, they may experience a significant loss if they
sell the ETNs at a time when such premium is no longer present, if
they redeem the ETNs at the daily redemption value or if they hold
the ETNs until maturity.
For more information on what a premium in the market prices
represents, please refer to the iPath website under “About ETNs”.
Investors are also encouraged to refer to the prospectus relating
to the ETNs for risk factors relating to the market value of the
ETNs, including the risks associated with a premium in market
prices.
The ETNs are riskier than ordinary unsecured debt securities and
have no principal protection. The ETNs are unsecured debt
obligations of the issuer, Barclays Bank PLC, and are not, either
directly or indirectly, an obligation of or guaranteed by any third
party. An investment in the ETNs involves significant risks,
including possible loss of principal, and may not be suitable for
all investors.
Daily redemptions at the option of the holders of the ETNs
continue to stay open. The prospectus relating to the relevant
series of ETNs can be found on EDGAR, the SEC website at:
www.sec.gov, as well as on the product website at
www.iPathETN.com.
Barclays Bank PLC is the issuer of iPath® ETNs and Barclays
Capital Inc. is the issuer’s agent in the distribution.
For further information, please instruct your
broker/advisor/custodian to email us at etndesk@barclays.com or
alternatively, your broker/custodian can call us at:
1-212-528-7990.
Selected Risk Considerations
An investment in the iPath ETNs described herein involves risks.
Selected risks are summarized here, but we urge you to read the
more detailed explanation of risks described under “Risk Factors”
in the applicable prospectus supplement and pricing supplement.
You May Lose Some or All of Your Principal: The ETNs are
exposed to any decrease in the level of the underlying index
between the inception date and the applicable valuation date.
Additionally, if the level of the underlying index is insufficient
to offset the negative effect of the investor fee and other
applicable costs, you will lose some or all of your investment at
maturity or upon redemption, even if the value of such index has
increased. Because the ETNs are subject to an investor fee and any
other applicable costs, the return on the ETNs will always be lower
than the total return on a direct investment in the index
components. The ETNs are riskier than ordinary unsecured debt
securities and have no principal protection.
The ETNs offer exposure to futures contracts and not direct
exposure to physical commodities: The ETNs offer investors
exposure to the price of New York Mercantile Exchange-traded Henry
Hub Natural gas futures contracts and not to the spot price of
Henry Hub Natural Gas. The price of a commodity futures contract
reflects the expected value of the commodity upon delivery in the
future, whereas the spot price of a commodity reflects the
immediate delivery value of the commodity. A variety of factors can
lead to a disparity between the expected future price of a
commodity and the spot price at a given point in time, such as the
cost of storing the commodity for the term of the futures contract,
interest charges to finance the purchase of the commodity and
expectations concerning supply and demand for the commodity. The
price movement of a futures contract is typically correlated with
the movements of the spot price of the reference commodity, but the
correlation is generally imperfect and price moves in the spot
market may not be reflected in the futures market (and vice versa).
Accordingly, the ETNs may underperform a similar investment that
reflects the return on the physical commodity.
Credit of Barclays Bank PLC: The ETNs are unsecured debt
obligations of the issuer, Barclays Bank PLC, and are not, either
directly or indirectly, an obligation of or guaranteed by any third
party. Any payment to be made on the ETNs, including any payment at
maturity or upon redemption, depends on the ability of Barclays
Bank PLC to satisfy its obligations as they come due. As a result,
the actual and perceived creditworthiness of Barclays Bank PLC will
affect the market value, if any, of the ETNs prior to maturity or
redemption. In addition, in the event Barclays Bank PLC were to
default on its obligations, you may not receive any amounts owed to
you under the terms of the ETNs.
Market and Volatility Risk: The prices of physical
commodities, including the commodities underlying the index
components, can fluctuate widely due to supply and demand
disruptions in major producing or consuming regions. Additionally,
the market value of the ETNs may be influenced by many
unpredictable factors including changes in supply and demand
relationships (including as a result of redemptions of the ETNs
and, in the case of the New ETNs, sales from inventory and
issuances of New ETNs), governmental policies and economic
events.
A Trading Market for the ETNs May Not Develop: Although
the ETNs are listed on NYSE Arca, a trading market for the ETNs may
not develop and the liquidity of the ETNs may be limited, as we are
not required to maintain any listing of the ETNs.
No Interest Payments from the ETNs: You will not receive
any interest payments on the ETNs.
Restrictions on the Minimum Number of ETNs and Date
Restrictions for Redemptions: Except in the circumstances
described above, you must redeem at least 50,000 ETNs of the same
issue at one time in order to exercise your right to redeem your
ETNs on any redemption date. You may only redeem your ETNs on a
redemption date if we receive a notice of redemption from you by
certain dates and times as set forth in the pricing supplement.
Uncertain Tax Treatment: Significant aspects of the tax
treatment of the ETNs are uncertain. You should consult your own
tax advisor about your own tax situation.
Barclays Bank PLC has filed a registration statement
(including a prospectus) with the SEC for the offering to which
this communication relates. Before you invest, you should
read the prospectus and other documents Barclays Bank PLC has filed
with the SEC for more complete information about the issuer and
this offering. You may get these documents for free by
visiting www.iPathETN.com or EDGAR on the SEC website at
www.sec.gov. Alternatively, Barclays Bank PLC will
arrange for Barclays Capital Inc. to send you the prospectus
if you request it by calling 212-528-7990, or you may request
a copy from any other dealer participating in the
offering.
The ETNs may be sold throughout the day on the exchange through
any brokerage account. There are restrictions on the minimum number
of ETNs you may redeem directly with the issuer as specified in the
applicable prospectus. Commissions may apply and there are tax
consequences in the event of sale, redemption or maturity of ETNs.
Sales in the secondary market may result in significant
losses.
“Bloomberg®”, “Bloomberg Commodity IndexSM”, “Bloomberg
Commodity Index Total ReturnSM”, “Bloomberg Natural Gas Subindex
Total ReturnSM” and “BCOM” are service marks of Bloomberg Finance
L.P. and its affiliates (collectively, “Bloomberg”) and have been
licensed for use for certain purposes by Barclays Bank PLC. Any
ETNs based on the Bloomberg Commodity Indices are not sponsored,
endorsed, sold or promoted by Bloomberg, UBS AG, UBS Securities LLC
(“UBS”), or any of their subsidiaries or affiliates. None of
Bloomberg, UBS AG, UBS Securities or any of their subsidiaries or
affiliates makes any representation or warranty, express or
implied, to the owners of or counterparties to the ETNs or any
member of the public regarding the advisability of investing in
securities or commodities generally or in the ETNs
particularly.
© 2017 Barclays Bank PLC. All rights reserved. iPath, iPath ETNs
and the iPath logo are registered trademarks of Barclays Bank PLC.
All other trademarks, servicemarks or registered trademarks are the
property, and used with the permission, of their respective
owners.
NOT FDIC INSURED · NO BANK GUARANTEE · MAY
LOSE VALUE
Barclays is a transatlantic consumer, corporate and
investment bank offering products and services across personal,
corporate and investment banking, credit cards and wealth
management, with a strong presence in our two home markets of the
UK and the US. With over 325 years of history and expertise in
banking, Barclays operates in over 40 countries and employs
approximately 120,000 people. Barclays moves, lends, invests and
protects money for customers and clients worldwide. For further
information about Barclays, please visit our website
home.barclays
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version on businesswire.com: http://www.businesswire.com/news/home/20170308006414/en/
Barclays Bank PLCAndrew Smith,
+1-212-412-7521andrew.x.smith@barclays.com
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