Insights from Issuers Exploring Fintech Solutions
During meetings with bankers and issuers in Paris, Guillaume Petitgas spoke to Etienne Oberthur, until recently Head of Funding & Treasury at Société du Grand Paris, to explore the journey of debt finance from the point of view of an issuer and how fintech solutions can materially improve workflow and decision making for issuers.
From an issuer’s standpoint, what are the pain points when working on debt (bond) funding?
For the issuer, the main challenge is to make the financing work, but from there many issues can arise depending on what type of issuer you are and your objectives. In my experience, one key challenge in issuing a bond is the trade off between size and price – a frequent issuer in the market will want to minimise the issue premium while a rarer issuer will choose to secure the size of its issue.
As fund-raising is a short-timed complex operation, the information required to deliver the bond changes on a daily or even hourly basis. Whilst the dealers provide issuers with most of the required information, no dealer has the issuer’s entire data set hence it is key for issuers to have their own “full-picture”.
A key part of this “full-picture” is knowledge of the investor base, the quality of the investors and their geographic diversity. If the issuer holds detailed knowledge of the investors (or can access relevant, up to date, research), the macro context of the investment dynamics can be ascertained together with the dealer.
And I do believe that technology can fill this gap which is currently addressed manually, if at all.
Has technology been present in recent years (in-house or brought in by your banks)?
Certain functionalities that we already have, such as ebooks, are impressive, but still require first class input from bankers to be up to date. In addition, the available tools were essentially built for dealers and not issuers. This is why I believe that, from the standpoint of an issuer, there is a lot to do.
What can technology do for issuers before, during and after a transaction?
There is so much potential for technology to transform issuance. Technology should provide the foundations on which to build streamlined operations – in today’s world, it should be seamless – there in the background to support. Specifically, I would wish to have
- Up-to-date understanding of investor base whether deal related or not
- Maintain / manage investor relations for better / more insightful communication before during and after the deal
During the deal, the priority is clearly the operation but if you are active during the allocation process, the knowledge of the investor base is clearly decisive to ensure you reach your goals (pricing, diversification or others).
If there was one thing that technology could provide in 2023, what would it be?
A tool to manage its investor relations in a broad sense – not only the detailed plan but also statistics and information on the investors met, feedback, price sensitivity, etc. It is a job that I used to do manually!