January 9, 2017 / 9:54 AM / 10 months ago

Electronic bookbuild drags primary debt into 21st century

LONDON, Jan 9 (IFR) - Commonwealth Bank of Australia has become the first borrower to have orders for a new issue submitted electronically, with industry-backed Ipreo’s bookbuild software used to syndicate its five-year covered bond last week.

The technology, which is backed by several of Europe’s leading DCM banks, allows investors to electronically submit orders directly to lead managers and receive notification of details such as pricing and allocations.

CBA printed the £350m five-year on Thursday via HSBC, Nomura and the issuer’s own investment bank.

“The number of buyside participants who have signed up to Investor Access is around 100 and growing rapidly but only a handful of those are currently able to submit orders via Investor Access,” said Chris Jones, managing director, debt syndicate at HSBC in London.

“We would expect the number of enabled investors to grow into the hundreds within a short period of time and ultimately expand to the thousands representing the relevant investor base for European credit.”

Jones said that in the medium term syndicates would likely run parallel processes, with a growing number of orders coming electronically and others through traditional channels.

This appears to have happened on CBA. One source involved in the syndication process said he had no idea some orders had come via Investor Access, as he had used his regular method and software.

Another source close to the deal said final allocations were not impacted by the way orders were submitted.


In contrast to the widespread automation of various financial markets such as foreign exchange and equity trading, bond syndication remains woefully antiquated.

The process remains labour intensive with sales officials often taking orders via telephone before inputting them into electronic order books, which then sometimes have to be reconciled.

Jones said the primary benefit of the technology was freeing up the time of individuals both within his own salesforce and those at buyside firms, “which will result in more time spent discussing the transaction in detail rather than a superficial exchange of terms”.

The bonds priced at Gilts plus 67bp, with UK accounts allocated 77%, Switzerland 7%, Germany 6% and others 10%. Fund managers got 78%, official institutions 14%, insurance and pension funds 4% and banks another 4%.

Investor Access’s original sponsoring group includes BNP Paribas, Credit Agricole, Commerzbank, Goldman Sachs, HSBC, ING, MUFG, NatWest Markets, Santander, Societe Generale and UBS.

Ipreo is owned by Blackstone and Goldman Sachs. (Reporting by Tom Porter)

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