UBS has acquired the commodity index business of AIG Financial Products in New York. That includes AIG's partnership rights for the DJ AIG Commodity index, the ubiquitous US commodity index and its sub-indices, which serve as the underlying for structured notes as well as a platform for commodity index swaps.
UBS will initially pay $15m in the deal, which is expected to close May 2009. A contingency payment of as much as $135m could be paid by UBS to AIG in the subsequent 18 months depending upon the future earnings of the business.
Introduced in 1998, the broad commodity index comprises futures contracts on 19 physical commodities. At the end of 2008, $23bn was pegged to the index, according to Dow Jones Indexes. SRP lists more than 200 US structured products linked to this benchmark.
The DJ AIG Commodity index closed last night at just over $110 per share, down more than 53% since its July 2008 high of over $238.
A UBS spokesperson would not comment as to whether UBS will rebrand the index with the Swiss investment bank's name, other than to say that final details will be announced at the deal's closing. But the expectation is that UBS's name will eventually replace AIG's.