Barclays expands iPath exchange-traded notes to include commodities indexes

By Sheri Kasprzak

New York, June 12 - Barclays Bank plc is expanding its popular iPath exchange-traded notes into four commodities-based indexes.

The ETNs have previously been linked to a variety of equity indexes and currency exchange rates.

"This seems like a logical next step for them," said one market insider. "Commodities are the next big thing, I think, in this market and they've been so successful with their other ETNs."

Sources at Barclays said they could not comment directly on the offerings and calls for comment left with the investment bank's media relations desk were not immediately returned.

Terms of the notes

The latest ETNs are linked to the Dow Jones - AIG Agriculture Total Return Sub-Index, the Dow Jones - AIG Copper Total Return Sub-Index, the Dow Jones - AIG Nickel Total Return Sub-Index and the Dow Jones - AIG Grains Total Return Sub-Index.

As with the existing iPath offerings, the zero-coupon notes all have a 30-year term.

The agriculture index includes seven futures contracts traded on U.S. exchanges including corn, soybeans, wheat, cotton, soybean oil, coffee and sugar.

The notes pay par at maturity multiplied by the index factor, which is equal to the closing value of the index divided by the initial level on the final valuation date, minus the investor fee. The fee is equal to 0.75% of par per year, multiplied by the index factor and divided by 365, calculated daily.

The other three notes have the same payout terms.

The contract used to calculate the copper index is the copper high-grade futures contract traded on the New York Commodities Exchange.

The grains index includes futures contracts on corn, soybeans and wheat traded on U.S. exchanges.

The contract used to calculate the nickel sub-index is the primary nickel futures contract traded on the London Metal Exchange.

Index performances

On June 11, the Dow Jones - AIG Agriculture Total Return Sub-Index closed at 125.46. A month earlier, on May 11, the index ended at 116.442 and a month before that, on April 11, the index ended at 117.459.

The grains sub-index closed at 104.34 on June 11, at 94.954 on May 11 and at 93.862 on April 11.

The copper sub-index closed at 750.528 on June 11, at 802.966 on May 11 and at 795.798 on April 11.

The nickel sub-index ended at 1,004.28 on June 11, at 1,192.738 on May 11 and at 1,084.034 on April 11.

Goldman prices Lira basket notes

In other structured products news, Goldman, Sachs & Co. priced $25.01 million in zero-coupon, 98% principal-protected notes linked to a Turkish lira basket for AB Svensk Exportkredit.

The basket includes equal weights of the Turkish lira against the dollar and the Turkish lira against the euro.

Payout at maturity is 98% of par plus the product of the absolute value of any negative basket return and the initial dollar/lira exchange rate divided by the final dollar/lira exchange rate.

There is a floor of 98% of par.

If the lira gains, the payout on the notes increases.

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