The fad for commodity index-linked investment products seems to be fading. So, structurers are looking to twin commodities with equity indices, or tweak product tenors to retain investor interest.
With commodity prices at news-making highs it is also hard to achieve attractive participation rates for option-based notes, said a New York structured equity salesman. He is looking at coupling a commodity index with an equity index to persuade investors back, but said the firm has not yet launched anything.
UBS in the U.S. is readying the launch of a two-year commodity-index note, but a structurer said the short tenor was more due to local appetite for short-dated investments than a view on commodities. He said UBS has looked into combining commodities with equity, but has not yet structured a deal. The firm is also considering base-metal-linked offerings, he added, as a way of getting away from the oil story. In Europe, Dawnay Day Quantum extended the maturity of its commodity linked offering this spring to six years from five, to improve the participation rate for investors (DW, 3/3).
