Credit Suisse Issues Long/Short Commodity-Backed Notes

Apr 18 2007 | 4:14pm ET

Hoping to lure institutional investors without commodity exposure into the asset class, Credit Suisse has issued US$190 million in long/short collateralized commodity obligations notes. The notes, which have received Fitch Ratings’ highest rating, are the first global long/short CCO transaction, according to CS.

“The combination of the long and short portfolio mitigates the risk to principal loss as well as mark-to-market value movements, whilst maintaining a yield substantially about most other AAA-rated instruments,” Gunnar Hoest, of CS’s fixed-income department, said. The notes, in five- and three-year tranches, were priced at a spread of 195 basis points and 180 bps over benchmark, respectively, and are available in U.S. dollar-, euro- and Australian dollar-denominations.

Buyers included banks, insurance companies and mutual funds, CS said, many of which have no experience with commodities exposure.

“It allows investors to put money in a balanced long and short basket of commodities in note form, diversifying their portfolios beyond the traditional credit and equities asset classes,” Bikran Chaudhury, also of the CS fixed-income department, said.


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