BarCap launches commodity-linked credit product

Fixed-income investors can now make use of a credit instrument that provides access to commodities as an asset class, says Barclays Capital. The investment bank has launched Apollo, a collateralised commodity obligation (CCO), which uses derivatives technology to create a debt-style payout. The product allows investors exposure to a basket of commodities in an established fixed-income format.

Historically, commodity investors have been limited to receiving equity-like returns, says BarCap, but the CCO references a diverse portfolio of commodities, including energy, precious metals and base metals.

The product is structurally similar to a traditional collateralised synthetic obligation (CSO), except that the underlying derivative assets are commodities trigger swaps.

In a traditional cash securitisation, a credit must exist in cash form – as a bond or loan – for an asset manager