Deutsche Bank (NYSE: DB) said it will redeem six of the exchange traded notes (ETNs) it partners on with Invesco’s (NYSE: IVZ) PowerShares unit.
“Deutsche Bank expects to provide notice of redemption via The Depository Trust Company on February 18, 2015. The repurchase value of the ETNs will be determined as of the date notice is given. Payment of the repurchase value of the ETNs will be made on the fifth business day following the date of notice, which is expected to be February 25, 2015. Accordingly, the last trading day for each ETN is expected to be February 24, 2015. Daily creations of each of the ETNs will be suspended immediately. Daily repurchases at the option of investors will be accepted in the normal manner up to and including February 18, 2015,” according to a statement from Deutsche Bank.
The six ETNs being redeemed are the PowerShares DB 3x Italian Treasury Bond Futures ETN (NYSEArca: ITLT), PowerShares DB Italian Treasury Bond Futures ETN (NYSEArca: ITLY), PowerShares DB U.S. Inflation ETN (NYSEArca: INFL), PowerShares DB U.S. Deflation ETN (NYSEArca: DEFL), PowerShares DB 3x Long US Dollar Index Futures ETN (NYSEArca: UUPT) and the PowerShares DB 3x Short US Dollar Index Futures ETN (NYSEArca: UDNT).
Year-to-date, 22 ETFs have been closed after nearly 100 were shuttered last year. In November, Deutsche suspended creations in ITLY and ITLT.
Limited or halted creation ability for exchange traded notes can affect the notes’ intraday pricing and liquidity, which can lead to wide premium or discount deviations away from the notes’ net asset value. By paying a large premium on an ETN relative to the note’s intraday indicative value, investors could expose themselves to substantial losses. [Creations Stopped in Italy Bond ETNs]
ETNs are debt-like instruments. An issuing financial institution promises to pay ETN investors a return on a benchmark index before the ETN matures. Additionally, some ETNs provide current distributions to investors. Since ETNs are a type of debt security, investors will have to watch out for the credit worthiness of the issuing bank.