Commodity-backed Debt Instrument
(Asset Backed Notes)
These are fixed-income securities that are issued by corporations and governments to raise capital. The contract issuer borrows capital from the noteholder and makes fixed payments to them at a fixed (or variable) interest rate for a specified period. These notes are collateralised by the cash flow or commodities of the issuer. They are usually tenured.
- Short Term Notes (1 -3 years)
- Medium Term Notes (3 – 7 years)
- Long Term Notes (7 – 20 years)
Commodities Commercial Papers are short-term debt financing securities consisting of unsecured and discounted promissory notes issued by large corporations with good credit ratings, which can be readily traded. Stakeholder company within the Commodities ecosystem can issue a commodity backed commercial paper to meet their financing needs.
(Exchange Traded Notes)
Commodity ETNs are types of unsecured debt securities that track an underlying index of securities and trade on a major exchange like a stock. Commodity ETNs are designed to provide access to broad, sector and single commodities exposures through indices comprised of commodities futures contracts. The ETNs are debt securities that can be bought and sold on an exchange and seek to provide investors with a return linked to the performance of an underlying index, less fees, and applicable costs.