Barclays Capital and Los Angeles-based TCW Asset Management have teamed up for a first-of-a-kind collateralized debt obligation which offers investors exposure to a managed portfolio of commodity swaps. Until now, only static transactions have been issued. A credit official familiar with the EUR250 million deal said investor requests for a managed version led to TCW coming on board.
TCW can substitute up to 20% of the underlying pool of commodity swaps throughout the CDO's five-year life and may reference up to 16 different commodities, including silver, platinum and copper. The swaps generate coupon payments for investors and mimic a credit default by knocking out if the reference price falls below a set barrier. Structuring officials at BarCap declined comment and those at TCW could not be contacted by press time.
The CDO is being pitched to institutional investors globally and is set to close later this month. Final notional size and prices are yet to be decided. Investors can buy exposure through euro- or U.S. dollar-denominated floating rate notes which will be issued by Belo, an Irish special-purpose entity.
