CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities Offered |
Maximum Aggregate Offering Price |
Amount of Registration Fee(1) | ||
Global Medium-Term Notes, Series A |
$878,000 | $62.60 |
(1) | Calculated in accordance with Rule 457(r) of the Securities Act of 1933 |
Pricing Supplement dated June 4, 2010 (To the Prospectus dated February 10, 2009, the Prospectus Supplement dated March 1, 2010 and Index Supplement dated March 1, 2010) |
Filed Pursuant to Rule 424(b)(2) Registration No. 333-145845 |
$ 878,000
Annual AutoCallable Notes due June 7, 2013 Linked to the S&P 500® Index
Global Medium-Term Notes, Series A, No. E-5492 |
Terms used in this pricing supplement, but not defined herein, shall have the meanings ascribed to them in the prospectus supplement. | ||
Issuer: | Barclays Bank PLC (Rated AA-/Aa3‡) | |
Initial Valuation Date: | June 4, 2010 | |
Issue Date: | June 9, 2010 | |
Final Valuation Date: | June 4, 2013* | |
Maturity Date: | June 7, 2013** (resulting in a term to maturity of approximately 3 years) | |
Denominations: | Minimum denomination of $1,000, and integral multiples of $1,000 in excess thereof | |
Reference Asset: | S&P 500® Index (the “Index”) (Bloomberg ticker symbol “SPX <Index>”) | |
Automatic Call: | On any call valuation date, if the Index closing level is greater than or equal to the initial level, the Notes will be automatically called for a cash payment per $1,000 principal amount Note equal to the applicable call price payable on the applicable early redemption date. | |
Call Valuation Dates*: | June 10, 2011 (the first call valuation date), June 4, 2012 (the second call valuation date) and June 4, 2013 (the final call valuation date) | |
Early Redemption Date*: | The third Business Day after the applicable call valuation date | |
Call Price: | For every $1,000 principal amount Note, you will receive one payment of $1,000 plus a call premium calculated as follows:
• 12.00% × $1,000 if called in respect of the first call valuation date
• 24.00% × $1,000 if called in respect of the second call valuation date
• 36.00% × $1,000 if called in respect of the final call valuation date | |
Protection Level: | 70% of the initial level | |
Payment at Maturity: | If the Notes are not automatically called, you will receive at maturity
(i) if the final level is equal to or above the protection level and is less than the initial level, a cash payment equal to the principal amount of the Notes
(ii) if the final level is below the protection level, a cash payment equal to (a) the principal amount of your notes plus (b) the principal amount multiplied by the Index Return, calculated per $1,000 principal amount Note as follows:
$1,000 + [$1,000 × (Index Return)]
Assuming the Notes are not called, you may lose some or all of your investment at maturity | |
Index Return: | The performance of the Index from the initial valuation date to the final valuation date, calculated as follows:
Final Level – Initial Level Initial Level | |
Initial Level: | 1,064.88, the Index closing level on the initial valuation date. | |
Final Level: | The Index closing level on the final valuation date. | |
Calculation Agent: | Barclays Bank PLC | |
CUSIP/ISIN: | 06740LXX8 and US06740LXX80 |
‡ | The Notes are not rated by Standard & Poor’s Ratings Services (“S&P”) or Moody’s Investors Service (“Moody’s”) as a result of certain policy changes by these organizations. As announced in December 2009, S&P no longer rates obligations, such as the Notes, with variable principal payments linked commodity prices, equity prices or indices linked to either commodity or equity prices. However, the other senior unsecured debt securities of a maturity of more than one year of Barclays Bank PLC unaffected by this policy change are rated AA- by S&P. In addition, as announced in June 2009, Moody’s no longer issues public ratings of notes, such as the Notes, for which repayment of principal is dependent on the occurrence of a non-credit event. However, the other senior unsecured debt securities of Barclays Bank PLC unaffected by this policy change are rated Aa3 by Moody’s. The ratings mentioned in this paragraph are subject to downward revision, suspension or withdrawal at any time by the assigning rating organization and are not a recommendation to buy, sell or hold securities. |
* | Subject to postponement in the event of a market disruption event and as described under “Reference Assets—Indices—Market Disruption Events for Securities with the Reference Asset Comprised of an Index or Indices of Equity Securities, Interest Rates, Currency Exchange Rates, Currencies, or Other Assets or Variables (Other than Commodities)” in the prospectus supplement. |
** | Subject to postponement in the event of a market disruption event and as described under “Terms of the Notes—Maturity Date” and “Reference Assets—Indices—Market Disruption Events for Securities with the Reference Asset Comprised of an Index or Indices of Equity Securities, Interest Rates, Currency Exchange Rates, Currencies, or Other Assets or Variables (Other than Commodities)” in the prospectus supplement. |
Investing in the Notes involves a number of risks. See “Risk Factors” beginning on page S-5 of the prospectus supplement and “Selected Risk Considerations” beginning on page PS-6 of this pricing supplement.
We may use this pricing supplement in the initial sale of the Notes. In addition, Barclays Capital Inc. or another of our affiliates may use this pricing supplement in market resale transactions in any Notes after the initial sale. Unless we or our agent informs you otherwise in the confirmation of sale, this pricing supplement is being used in a market resale transaction.
The Notes will not be listed on any U.S. securities exchange or quotation system. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this pricing supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The Notes constitute our direct, unconditional, unsecured and unsubordinated obligations and are not deposit liabilities of Barclays Bank PLC and are not insured by the U.S. Federal Deposit Insurance Corporation or any other governmental agency of the United States, the United Kingdom or any other jurisdiction.
Price to Public |
Agent’s Commission‡‡ |
Proceeds to Barclays Bank PLC | ||||
Per Note |
100% | 2% | 98% | |||
Total |
$878,000 | $17,560 | $860,440 |
‡‡ | Barclays Capital Inc. will receive commissions from the Issuer equal to 2% of the principal amount of the notes, or $20 per $1,000 principal amount, and may retain all or a portion of these commissions or use all or a portion of these commissions to pay selling concessions or fees to other dealers. Accordingly, the percentage and total proceeds to Issuer listed herein is the minimum amount of proceeds that Issuer receives. |
ADDITIONAL TERMS SPECIFIC TO THE NOTES
You should read this pricing supplement together with the prospectus dated February 10, 2009, as supplemented by the prospectus supplement dated March 1, 2010 relating to our Global Medium-Term Notes, Series A, of which these Notes are a part. This pricing supplement, together with the documents listed below, contains the terms of the Notes and supersedes all prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Risk Factors” in the prospectus supplement, as the Notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisors before you invest in the Notes.
You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
• | Prospectus dated February 10, 2009: |
http://www.sec.gov/Archives/edgar/data/312070/000119312509023285/dposasr.htm
• | Prospectus Supplement dated March 1, 2010: |
http://www.sec.gov/Archives/edgar/data/312070/000119312510043357/d424b3.htm
• | Index supplement dated March 1, 2010: |
http://www.sec.gov/Archives/edgar/data/312070/000119312510043717/d424b3.htm
Our SEC file number is 1-10257. As used in this pricing supplement, the “Company,” “we,” “us,” or “our” refers to Barclays Bank PLC.
PROGRAM CREDIT RATING
The Notes are not rated by Standard & Poor’s Ratings Services (“S&P”) or Moody’s Investors Service (“Moody’s”) as a result of certain policy changes by these organizations. As announced in December 2009, S&P no longer rates obligations, such as the Notes, with variable principal payments linked commodity prices, equity prices or indices linked to either commodity or equity prices. However, the other senior unsecured debt securities of a maturity of more than one year of Barclays Bank PLC unaffected by this policy change are rated AA- by S&P. An AA rating from S&P generally indicates that the issuer’s capacity to meet its financial commitment on the obligations is very strong. In addition, as announced in June 2009, Moody’s no longer issues public ratings of notes, such as the Notes, for which repayment of principal is dependent on the occurrence of a non-credit event. However, the other senior unsecured debt securities of Barclays Bank PLC unaffected by this policy change are rated Aa3 by Moody’s. An Aa3 rating by Moody’s indicates that the rated securities are currently judged by Moody’s to be obligations of high quality and are subject to very low credit risk. The ratings mentioned in this paragraph are a statement of opinion and not a statement of fact and are subject to downward revisions, suspension or withdrawal at any time by the assigning rating agency and are not a recommendation to buy, sell or hold securities.
Hypothetical Examples of Amounts Payable Upon Automatic Call or at Maturity
Each Table of Hypothetical Values based on the assumptions outlined below, demonstrates the return that you would have earned from (i) an investment in the Notes compared to (ii) a direct investment in the Index, based on certain percentage changes between the initial level and the final level of the Index and depending on whether the Notes are automatically called (prior to the deduction of any applicable brokerage fees or charges).
In each Table of Hypothetical Values some amounts are rounded and actual returns may be different. The following is a general description of how the hypothetical values in the table were determined.
If the Index closing level is at or above the initial level on any call valuation date, the Notes will be automatically called for redemption at a cash payment per $1,000 principal amount Note equal to the applicable call price on the applicable early redemption date. The applicable call price is determined as follows:
For every $1,000 principal amount Note, you will receive one payment of $1,000 plus a call premium calculated as follows:
• | 12.00% × $1,000 if called in respect of the first call valuation date |
PS–2
• | 24.00% x $1,000 if called in respect of the second call valuation date |
• | 36.00% x $1,000 if called in respect of the final call valuation date |
If the Notes are not automatically called, the final level is determined on the final valuation date and you will receive a payment at maturity:
• | If the final level is below the protection level, a cash payment equal to (a) the principal amount of your notes plus (b) the principal amount multiplied by the Index Return, calculated per $1,000 principal amount Note as follows: |
$1,000 + [$1,000 × (Index Return)]
• | If the final level is equal to or above the protection level and is less than the initial level, a cash payment equal to the principal amount of the Notes. |
Assumptions:
• | Investor purchases $1,000 principal amount of Notes on the initial valuation date at the initial public offering price and holds the Notes to maturity if the Notes are not automatically called. |
• | No market disruption events, antidilution adjustments, reorganization events or events of default occur during the term of the Notes. |
Index: SPX
Initial Level: 1,064.88
Protection Level: 70% of the initial level
Call Valuation Dates: June 10, 2011, June 4, 2012, June 4, 2013
Maturity Date: June 7, 2013
The call premium percentage for the first call valuation date: 12.00%
The call premium percentage for the second call valuation date: 24.00%
The call premium percentage for the final call valuation date: 36.00%
Table of Hypothetical Values
If Notes are Called in respect of the first Call Valuation Date
- | ||||
Index Return |
Investment in the Notes |
Direct Investment in the Index | ||
+ 100% |
$1,120 | $2,000 | ||
+ 90% |
$1,120 | $1,900 | ||
+ 80% |
$1,120 | $1,800 | ||
+ 70% |
$1,120 | $1,700 | ||
+ 60% |
$1,120 | $1,600 | ||
+ 50% |
$1,120 | $1,500 | ||
+ 40% |
$1,120 | $1,400 | ||
+ 30% |
$1,120 | $1,300 | ||
+ 20% |
$1,120 | $1,200 | ||
+ 10% |
$1,120 | $1,100 | ||
+ 5% |
$1,120 | $1,050 | ||
0% |
$1,120 | $1,000 | ||
- 5% |
$1,120 | $950 | ||
- 10% |
$1,120 | $900 | ||
- 20% |
$1,120 | $800 | ||
- 30% |
$1,120 | $700 | ||
- 40% |
$1,120 | $600 | ||
- 50% |
$1,120 | $500 | ||
- 60% |
$1,120 | $400 | ||
- 70% |
$1,120 | $300 | ||
- 80% |
$1,120 | $200 | ||
- 90% |
$1,120 | $100 | ||
- 100% |
$1,120 | $0 |
PS–3
Since the closing level of the Index on the first call valuation date is equal to or greater than the initial level, the Notes are automatically called and you will receive on the first early redemption date a cash payment per $1,000 principal amount Note equal to $1,000 plus the corresponding call premium of $120, regardless of the performance of the Index on the final valuation date. Your return on the Notes in this scenario would be 12.00%.
Table of Hypothetical Values
If Notes are Called in respect of the second Call Valuation Date
- | ||||
Index Return |
Investment in the Notes |
Direct Investment in the Index | ||
+ 100% |
$1,240 | $2,000 | ||
+ 90% |
$1,240 | $1,900 | ||
+ 80% |
$1,240 | $1,800 | ||
+ 70% |
$1,240 | $1,700 | ||
+ 60% |
$1,240 | $1,600 | ||
+ 50% |
$1,240 | $1,500 | ||
+ 40% |
$1,240 | $1,400 | ||
+ 30% |
$1,240 | $1,300 | ||
+ 20% |
$1,240 | $1,200 | ||
+ 10% |
$1,240 | $1,100 | ||
+ 5% |
$1,240 | $1,050 | ||
0% |
$1,240 | $1,000 | ||
- 5% |
$1,240 | $950 | ||
- 10% |
$1,240 | $900 | ||
- 20% |
$1,240 | $800 | ||
- 30% |
$1,240 | $700 | ||
- 40% |
$1,240 | $600 | ||
- 50% |
$1,240 | $500 | ||
- 60% |
$1,240 | $400 | ||
- 70% |
$1,240 | $300 | ||
- 80% |
$1,240 | $200 | ||
- 90% |
$1,240 | $100 | ||
- 100% |
$1,240 | $0 |
Since the closing level of the Index on the second call valuation date is equal to or greater than the initial level, the Notes are automatically called and you will receive on the second early redemption date a cash payment per $1,000 principal amount Note equal to $1,000 plus the corresponding call premium of $240, regardless of the performance of the Index on the final valuation date. Your total return on the Notes in this scenario would be 24.00%.
Table of Hypothetical Values
If Notes are NOT Called in respect of the first Call
Valuation Date and the second Call Valuation Date
- | ||||
Index Return |
Investment in the Notes |
Direct Investment in the Index | ||
+ 100% |
$1,360 | $2,000 | ||
+ 90% |
$1,360 | $1,900 | ||
+ 80% |
$1,360 | $1,800 | ||
+ 70% |
$1,360 | $1,700 | ||
+ 60% |
$1,360 | $1,600 | ||
+ 50% |
$1,360 | $1,500 | ||
+ 40% |
$1,360 | $1,400 | ||
+ 30% |
$1,360 | $1,300 | ||
+ 20% |
$1,360 | $1,200 | ||
+ 10% |
$1,360 | $1,100 | ||
+ 5% |
$1,360 | $1,050 | ||
0% |
$1,360 | $1,000 | ||
- 5% |
$1,000 | $950 | ||
- 10% |
$1,000 | $900 | ||
- 20% |
$1,000 | $800 | ||
- 30% |
$1,000 | $700 | ||
- 31% |
$690 | $690 | ||
- 40% |
$600 | $600 | ||
- 50% |
$500 | $500 | ||
- 60% |
$400 | $400 | ||
- 70% |
$300 | $300 | ||
- 80% |
$200 | $200 | ||
- 90% |
$100 | $100 | ||
- 100% |
$0 | $0 |
PS–4
If Notes are not called in respect of the first call valuation date and the second call valuation date and the final level is at or above the initial level on the final call valuation date, the Notes are automatically called and you will receive on the applicable early redemption date a cash payment per $1,000 principal amount Note equal to $1,000 plus the corresponding call premium of $360. Your total return on the Notes in this scenario would be 36.00%.
If Notes are not automatically called and the final level is below the initial level but at or above the protection level on the final valuation date, you will receive on the maturity date a cash payment per $1,000 principal amount Note equal to $1,000. Your return on the Notes would be equal to 0%.
If Notes are not automatically called and the final level is below the protection level on the final valuation date, you will receive on the maturity date a cash payment equal to (a) the principal amount of your notes plus (b) the principal amount multiplied by the Index Return. Your return on the Notes would be equal to the Index Return.
Selected Purchase Considerations
• | Market Disruption Events and Adjustments—The call valuation dates, early redemption dates, final valuation date, the maturity date and the payment at maturity are subject to adjustment as described in the following sections of the prospectus supplement: |
• | For a description of what constitutes a market disruption event as well as the consequences of that market disruption event, see “Reference Assets—Indices—Market Disruption Events for Securities with the Reference Asset Comprised of an Index or Indices of Equity Securities, Interest Rates, Currency Exchange Rates, Currencies, or Other Assets or Variables (Other than Commodities)” with respect to the reference asset; and |
• | For a description of further adjustments that may affect the reference asset, see “Reference Assets—Indices—Adjustments Relating to Securities with the Reference Asset Comprised of an Index”. |
• | Appreciation Potential—If the Index closing level is greater than or equal to the initial level on a call valuation date, your investment will yield a payment per $1,000 principal amount Note of $1,000 plus a call premium equal to: (i) 12.00% multiplied by $1,000 if your Notes are automatically called in respect of the first call valuation date, (ii) 24.00% multiplied by $1,000 if your Notes are automatically called in respect of the second call valuation date and (iii) 36.00% multiplied by $1,000 if your Notes are automatically called in respect of the final call valuation date. Because the Notes are our senior unsecured obligations, payment of any amount if called or at maturity is subject to our ability to pay our obligations as they become due. |
• | Limited Protection Against Loss—If the Notes are called or the final level does not fall below the protection level, you will be entitled to receive at least the full principal amount of your Notes at maturity. But if the Notes are not called and the final level is below the protection level, for every 1% that the Index has declined from the initial level you will lose an amount equal to 1% of the principal amount of your Notes. |
• | Diversification Among U.S. Equities of the S&P 500® Index—The return on the Notes is linked to the S&P 500® Index. The S&P 500® Index consists of 500 component stocks selected to provide a performance benchmark for the U.S. equity markets. For additional information about the Index, see the information set forth under “Non Proprietary Indices—Equity Indices—S&P 500® Index” in the Index Supplement. |
• | Certain U.S. Federal Income Tax Considerations—Some of the tax consequences of your investment in the Notes are summarized below. The discussion below supplements the discussion under ‘‘Certain U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement. As described in the prospectus supplement, this section applies to you only if you are a U.S. Holder (as defined in the accompanying prospectus supplement) and you hold your Notes as capital assets for tax purposes and does not apply to you if you are a member of a class of holders subject to special rules or are otherwise excluded from the discussion in the prospectus supplement. |
PS–5
The United States federal income tax consequences of your investment in the Notes are uncertain and the Internal Revenue Service could assert that the Notes should be taxed in a manner that is different than described below. Pursuant to the terms of the Notes, Barclays Bank PLC and you agree, in the absence of a change in law or an administrative or judicial ruling to the contrary, to characterize your Notes as a pre-paid cash-settled executory contract with respect to the Index. If your Notes are so treated, you should generally recognize capital gain or loss upon the sale, redemption or maturity of your Notes in an amount equal to the difference between the amount you receive at such time and the amount you paid for your Notes. Such gain or loss should generally be long-term capital gain or loss if you have held your Notes for more than one year.
In the opinion of our special tax counsel, Sullivan & Cromwell LLP, it would be reasonable to treat your Notes in the manner described above. This opinion assumes that the description of the terms of the Notes in this pricing supplement is materially correct.
As discussed further in the accompanying prospectus supplement, the Treasury Department and the Internal Revenue Service are actively considering various alternative treatments that may apply to instruments such as the Notes, possibly with retroactive effect. Other alternative treatments for your Notes may also be possible under current law. For example, it is possible that the Notes could be treated as a debt instrument that is subject to the special tax rules governing contingent payment debt instruments. If your Notes are so treated, you would be required to accrue interest income over the term of your Notes and you would recognize gain or loss upon the sale, redemption or maturity of your Notes in an amount equal to the difference, if any, between the amount you receive at such time and your adjusted basis in your Notes. Any gain you recognize upon the sale, redemption or maturity of your Notes would be ordinary income and any loss recognized by you at such time would generally be ordinary loss to the extent of interest you included in income in the current or previous taxable years with respect to your Notes, and thereafter would be capital loss.
For a further discussion of the tax treatment of your Notes as well as other possible alternative characterizations, please see the discussion under the heading “Certain U.S. Federal Income Tax Considerations—Certain Notes Treated as Forward Contracts or Executory Contracts” in the accompanying prospectus supplement. You should consult your tax advisor as to the possible alternative treatments in respect of the Notes. For additional, important considerations related to tax risks associated with investing in the Notes, you should also examine the discussion in “Selected Risk Considerations—Taxes”, in this pricing supplement.
Recently Enacted Legislation. Under recently enacted legislation, individuals that own “specified foreign financial assets” with an aggregate value in excess of $50,000 in taxable years beginning after March 18, 2010 will generally be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” includes any financial accounts maintained by foreign financial institutions, as well as any of the following (which may include the Notes), but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. Individuals are urged to consult their tax advisors regarding the application of this legislation to their ownership of the Notes.
For taxable years beginning after December 31, 2012, a U.S. person that is an individual, estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax (the “Medicare tax”) on the lesser of (1) the U.S. person’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. person’s modified gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s circumstances). A holder’s net investment income will generally include its net gains from the sale, redemption or maturity of the Notes, unless such net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a U.S. person that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in the Notes.
An investment in the Notes involves significant risks. Investing in the Notes is not equivalent to investing directly in the Index. These risks are explained in more detail in the “Risk Factors” section of the prospectus supplement, including the risk factors discussed under the following headings:
• | “Risk Factors—Risks Relating to All Securities”; |
• | “Risk Factors—Additional Risks Relating to Securities with Reference Assets That Are Equity Securities or Shares or Other Interests in Exchange-Traded Funds, That Contain Equity Securities or Shares or Other Interests in Exchange-Traded Funds or That Are Based in Part on Equity Securities or Shares or Other Interests in Exchange-Traded Funds”; |
• | “Risk Factors—Additional Risks Relating to Notes Which Pay No Interest”; and |
• | “Risk Factors—Additional Risks Relating to Notes with a Barrier Percentage or a Barrier Level”. |
PS–6
In addition to the risks described above, you should consider the following:
• | Your Investment in the Notes May Result in a Loss—If the Notes are not called and the final level declines by more than 30% compared to the initial level, you will lose 1% of your principal amount for every 1% decline in the final level compared to the initial level. If the Notes are not called, you may lose some or all of your investment at maturity. |
• | Potential Early Exit—While the original term of the Notes is three years, the Notes will be automatically called if the Index closing level is at or above the initial level in respect of any call valuation date. If the Notes are called, you will be entitled only to the principal amount of your Notes plus the applicable call premium set forth on the cover of this pricing supplement. You will not be entitled to any appreciation in the Index on the final valuation date, which may be significant. |
• | No Dividend Payments or Voting Rights—As a holder of the Notes, you will not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of securities composing the Index would have. |
• | Credit of Issuer—The Notes are senior unsecured debt obligations of the issuer, Barclays Bank PLC and are not, either directly or indirectly, an obligation of any third party. Any payment to be made on the Notes, including any principal protection provided at maturity, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. 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 Notes. |
• | Certain Built-In Costs Are Likely to Adversely Affect the Value of the Notes Prior to Maturity—While the payment at maturity described in this pricing supplement is based on the full principal amount of your Notes, the original issue price of the Notes includes the agent’s commission and the cost of hedging our obligations under the Notes through one or more of our affiliates. As a result, the price, if any, at which Barclays Capital Inc. and other affiliates of Barclays Bank PLC will be willing to purchase Notes from you in secondary market transactions will likely be lower than the original issue price, and any sale prior to the maturity date could result in a substantial loss to you. The Notes are not designed to be short-term trading instruments. Accordingly, you should be able and willing to hold your Notes to maturity. |
• | Lack of Liquidity—The Notes will not be listed on any securities exchange. Barclays Capital Inc. and other affiliates of Barclays Bank PLC intend to offer to purchase the Notes in the secondary market but are not required to do so. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the Notes easily. Because other dealers are not likely to make a secondary market for the Notes, the price at which you may be able to trade your Notes is likely to depend on the price, if any, at which Barclays Capital Inc. and other affiliates of Barclays Bank PLC are willing to buy the Notes. |
• | Potential Conflicts—We and our affiliates play a variety of roles in connection with the issuance of the Notes, including acting as calculation agent and hedging our obligations under the Notes. In performing these duties, the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor in the Notes. |
• | Taxes—The U.S. federal income tax treatment of the Notes is uncertain and the Internal Revenue Service could assert that the Notes should be taxed in a manner that is different than described above. As discussed further in the accompanying prospectus supplement, on December 7, 2007, the Internal Revenue Service issued a notice indicating that it and the Treasury Department are actively considering whether, among other issues, you should be required to accrue interest over the term of an instrument such as the Notes even though you will not receive any payments with respect to the Notes until redemption or maturity and whether all or part of the gain you may recognize upon sale, redemption or maturity of an instrument such as the Notes could be treated as ordinary income. The outcome of this process is uncertain and could apply on a retroactive basis. You should consult your tax advisor as to the possible alternative treatments in respect of the Notes. |
• | Many Economic and Market Factors Will Impact the Value of the Notes—In addition to the level of the Index on any day, the value of the Notes will be affected by a number of economic and market factors that may either offset or magnify each other, including: |
• | the expected volatility of the Index; |
• | the time to maturity of the Notes; |
• | the dividend rate on the common stocks underlying the Index; |
• | interest and yield rates in the market generally; |
• | a variety of economic, financial, political, regulatory or judicial events; and |
• | our creditworthiness, including actual or anticipated downgrades in our credit ratings. |
Historical Information
The following graph sets forth the historical performance of the Index based on the daily Index closing level from January 7, 2002 through June 4, 2010. The Index closing level on June 4, 2010 was 1,064.88.
We obtained the Index closing levels below from Bloomberg, L.P. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg, L.P. The historical levels of the Index should not be taken as an indication of future performance, and no assurance can be given as to the Index closing level on any of the review dates. We cannot give you assurance that the performance of the Index will result in the return of any of your initial investment.
PS–7
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
We have agreed to sell to Barclays Capital Inc. (the “Agent”), and the Agent has agreed to purchase from us, the principal amount of the Notes, and at the price, specified on the cover of this pricing supplement. The Agent is committed to take and pay for all of the Notes, if any are taken.
PS–8