The company is seeking a Standard and Poor's rating on the bonds. This will not be made until the bonds are listed on 14 September, but it is expected to be a "high investment grade."
Macquarie’s head of alterative assets, Craig Swanger says there is still a lot of demand for investment products but in the wake of finance company collapses, a lot of nervousness.
"The New Zealand market has a large amount of cash looking for somewhere to go at the moment."
He says the bond is aimed at investors who are prepared to do a bit more thinking about their investing. There is still a considerable lack of knowledge about some investment issues, notably credit ratings.
"People see credit rating and make the leap to thinking it is risk free," he says.
"It's like the advertisements which tell you something is 95% fat free. There is still 5% fat there."
Rather ratings are "simply a definition of average default risk and through time have proven a
strong indicator of default probability."
TCW Asset Management Company, a subsidiary of one of Europe’s largest investment banks Société Générale Asset Management, has been appointed to manage the fund.
TCW can select commodities from the base metals (aluminium, copper, nickel, lead, tin, zinc), precious metals (gold, silver, platinum and palladium) and energy (oil and gas) sectors.
The return depends on the prices of the commodities selected by the manager staying above specified levels. The repayment of principal depends on the prices of the commodities selected staying above specified levels
The fact that those levels are mostly set lower than historic record low prices means less risk, Swanger says.
Commodity Bonds key points
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