December 8, 2016 / 10:05 PM / a year ago

VelocityShares to launch oil ETNs to replace delisted notes

NEW YORK, Dec 8 (Reuters) - VelocityShares said on Thursday it was launching two new exchange-traded notes as an “alternative” to a pair of popular products used to bet on oil prices that will be delisted this week.

The new notes - VelocityShares 3x Long Crude Oil ETN (UWT) and VelocityShares 3x Inverse Crude Oil ETN (DWT) - are being issued by Citigroup.

The notes will replace Credit Suisse’s $617 million VelocityShares 3x Long Crude Oil ETN (UWTI), which is poised to become the largest-ever note to be delisted from U.S. exchanges after trading Thursday. A smaller related ETN, the $210 million VelocityShares 3x Inverse Crude Oil ETN, is also delisting.

The notes are delisting without a new redemption option for investors who retain the option, raising the prospect that investors who fail to find buyers for the notes could be stuck in the products, which do not officially expire until 2032.

Credit Suisse said in a Nov. 16 statement it would delist the ETN to better align “its product suite with its broader strategic growth plans.”

Investors hold $22 billion of U.S. ETNs which, like debt, constitute a pledge by an issuer. Payouts are based on the performance of the underlying asset, but the notes do not “hold” those assets, unlike ETFs to which they are often compared.

VelocityShares is a unit of Janus Capital Group Inc.

Reporting by Trevor Hunnicutt; Editing by Andrew Hay

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