Barclays today clarified the impact of corporate actions that affect certain index constituents of the CIBC Atlas Select MLP Index (the Index).
On January 9, 2019, Valero Energy Corporation (Ticker: VLO)(VLO) and Valero Energy Partners LP (Ticker: VLP)(VLP) closed on their previously announced merger in which VLO acquired VLP. Consistent with the rules of the Index, the acquisition of VLP is treated as a delisting. A notional cash allocation equal to the number of constituent shares multiplied by the closing price of VLP on January 9, 2019 was applied. The cash allocation will remain in the Index until the next scheduled Rebalance Date.
Additionally, on January 10, 2019, EQM Midstream Partners LP (Ticker: EQM)(EQM) and EQGP Holdings LP (Ticker: EQGP)(EQGP) expect to close on their previously announced merger in which EQM acquires EQGP. Consistent with the rules of the Index, the acquisition of EQGP is being treated as a delisting. Although EQGP stock is not currently an index constituent of the Index, on December 27, 2018 (the Selection Date), EQGP was selected as a target index constituent for the next Rebalance Date, which commences on Friday, January 11, 2019.
Since the Selection Date occurred prior to the effective date of the EQGP and VLP delistings, the target weights of the index constituents for the next Index rebalance will include EQGP and VLP. Barclays Bank PLC, as index sponsor of the Index (the Index Sponsor), has announced that the target weights of EQGP and VLP will be reallocated across the remaining index constituents in proportion of their target weights from the Selection Date.
The target weights for the top Limited Partnership and General Partnership index constituents, effective after the rebalance that commences on Friday, January 11, 2019, are reported in the table below.
|LIMITED PARTNERSHIPS||GENERAL PARTNERSHIPS|
|Ticker||Company||Target Weight||Ticker||Company||Target Weight|
|EPD||Enterprise Products Partners||8.1403%||ENB||Enbridge Inc.||4.0702%|
|ET||Energy Transfer LP||8.1403%||KMI||Kinder Morgan Inc.||4.0702%|
|MMP||Magellan Midstream Partners||8.1403%||OKE||Oneok Inc.||4.0702%|
|PAA||Plains All American Pipeline LP||8.1403%||TGE||Tallgrass Energy LP||4.0702%|
|MPLX||MPLX LP||8.1403%||TRP||Transcanada Corp.||4.0702%|
|WMB||Williams Cos Inc.||4.0702%|
The CIBC Atlas Select MLP Index (Index) is designed to provide exposure to a basket of midstream U.S. and Canadian master limited partnerships, limited liability companies and corporations (collectively, the Index Constituents) that trade on major U.S. exchanges, are classified in the GICS Energy Sector or GICS Gas Utilities Industry according to the Global Industry Classification Standard (GICS) and meet certain eligibility criteria. The Index Constituents are selected for inclusion in the Index using the CIBC Select Master Limited Partnership Strategy (the Strategy) developed by CIBC Private Wealth Advisers, Inc. (the Index Selection Agent). The Strategy dynamically selects a basket of up to 100 Index Constituents based on their long-term credit rating, the portion of their cash flow driven by mid-stream operations and their size as measured by free-float market capitalization and average daily trading value. The Index Selection Agent provides the Index Constituents selected by the Strategy to Barclays Bank PLC as Index Sponsor. Constituent additions to and deletions from the Index do not reflect an opinion by Barclays Bank PLC on the investment merits of the respective securities.
The Barclays ETN+ Select MLP ETNs (the ETNs) are linked to the performance of the VWAP of the Index. The ETNs were listed on the NYSE Arca stock exchange in March 2013 under the ticker symbol ATMP. An investment in the ETNs involves significant risks, including possible loss of principal, and may not be suitable for all investors. The ETNs are riskier than ordinary unsecured debt securities and have no principal protection. The ETNs are speculative and may exhibit high volatility. The ETNs are also subject to certain investor fees, which will have a negative effect on the value of the ETNs. You are not guaranteed to receive coupon payments on the ETNs. You will receive a coupon payment on a coupon payment date only to the extent that the accrued dividend exceeds the accrued investor fee on the relevant coupon valuation date.
Owning the ETNs is not the same as owning interests in the Index Constituents or a security directly linked to the performance of the Index.
For further information, please contact the Barclays ETN desk at 1-212-528-7990.
The prospectus for the ETNs to which this communication relates can be found at: http://www.etnplus.com/atmpprospectus
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About CIBC Private Wealth Management
CIBC Private Wealth Management serves as a trusted advisor to private clients and select foundations and endowments, with approximately $52 billion in assets under management and administration (as of March 31, 2018) and offices in 19 locations across the U.S. Affluent individuals and families turn to CIBC Private Wealth Management for a long-term, trusted partner that can serve all of their investment, estate, trust and legacy planning, as well as private banking needs met by CIBC Bank USA. For more information, visit us.cibc.com/private-wealth.
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Selected Risk Considerations
An investment in any ETNs linked to the CIBC Atlas Select MLP Index (the ETNs) 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 Volume Weighted Average Price (VWAP) level between the inception date and the applicable valuation date. Additionally, if the VWAP level 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 VWAP value 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.
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.
Issuer Redemption: Barclays Bank PLC will have the right to redeem or call the ETNs (in whole but not in part) at its sole discretion and without your consent on any trading day on or after the inception date until and including maturity.
The Payment on the ETNs is Linked to the VWAP Level, Not to the Closing Level of the Index and Not to the Published Intraday Indicative Value of the ETNs: Your payment at maturity or upon early redemption is linked to the performance of the VWAP level, as compared to the initial VWAP level. Although the VWAP level is intended to track the performance of the Index, the calculation of the VWAP level is different from the calculation of the official closing level of the Index. Therefore, the payment at maturity or early redemption of your ETNs, may be different from the payment you would receive if such payment were determined by reference to the official closing level of the Index.
No Guaranteed Coupon Payments: You are not guaranteed to receive coupon payments on the ETNs. You will receive a coupon payment on a coupon payment date only to the extent that the accrued dividend exceeds the accrued investor fee on the relevant coupon valuation date. The amount of the accrued dividend on any coupon valuation date depends in part on the aggregate cash value of distributions that a reference holder would have been entitled to receive in respect of the index constituents prior to the relevant coupon valuation date.
Market and Volatility Risk: The return on the ETNs is linked to the performance of the VWAP level of the Index which, in turn, is linked to the performance of the master limited partnerships and other securities that are included as index constituents at any time. The prices of the index constituents may change unpredictably and, as a result, affect the level of the Index and the value of your ETNs in unforeseeable ways.
Concentration Risk: The index constituents are companies in the Energy Sector or Gas Utilities Sector, as determined by the GICS classification system. In addition, many of the index constituents are smaller, non-diversified businesses that are exposed to the risks associated with such businesses, including the lack of capital funding to sustain or grow businesses and potential competition from larger, better financed and more diversified businesses. The ETNs are susceptible to general market fluctuations in the energy and gas MLP market and to volatile increases and decreases in value, as market confidence in, and perceptions regarding the index constituents change. Your investment may therefore carry risks similar to a concentrated securities investment in one industry or sector.
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.
Restrictions on the Minimum Number of ETNs and Date Restrictions for Redemptions: You must redeem at least 50,000 ETNs 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.
Tax Treatment: Significant aspects of the tax treatment of the ETNs may be less favorable than a direct investment in MLPs and are uncertain. You should consult your own tax advisor about your own tax situation.
The ETNs may be sold throughout the day on the exchange through any brokerage account. Commissions may apply and there are tax consequences in the event of sale, redemption or maturity of ETNs.
CIBC Atlas Select MLP Index is a trademark of Barclays Bank PLC.
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