A bond whose interest payments and/or principal repayment are tied to the price of a commodity such as silver, copper, wheat, or oil. Essentially, this bond carrier a relatively low coupon at the time of issue. However, it allows the holder to hedge against inflation risk thanks to its performance being linked to the commodity price over its life. This bond is typically issued by companies that invest or have long positions in the underlying commodity.
This debt instrument is also known as a gold bond.
