Dawnay Day Quantum, a U.K. structured investments provider, has issued a revamped version of its commodity-linked note to lure investors still interested in the asset class. Commodities Turbo II consists of a six-year option on a basket of eight commodities which includes natural gas, brent crude and zinc. The option offers 155% participation in the upside of the basket and a zero coupon bond ensures 90% of investors' capital is returned at maturity if there are no gains on the basket. The note is a year longer than Turbo I because commodity buying for typically five-year retail investment notes makes pricing more attractive beyond this date.
Mark Mathias, managing director in London, said in spite of high correlation in the basket buying one option on the eight commodities was cheaper than buying an option on each. He declined to name the counterparty, beyond noting it is a U.K. firm rated AA or better. With a raft of commodity-index-linked notes on offer right now (DW, 11/18), Mathias thinks Dawnay's offer will stand out. "We still think that the long end of the curve is cheap and it's still a good buy," said Mathias.
