Debt markets: Market round-up

BoB: the builders' friend

UK building societies are on the verge of using a multi-issuer covered bond structure being devised by Barclays Capital. The platform, affectionately nicknamed BoB (Builders of Britain) replicates the AyT system that gives Spain's cajas access to the cedulas sector.

This is an important development for the UK's building societies. Their mutual ownership structure precludes them carrying out securitizations because it is impossible to execute a true sale to a special purpose vehicle. This places them at a major funding disadvantage to those UK mortgage banks that enjoy public liability structures.

The introduction of structured covered bonds by HBOS two years ago placed the building societies at a further disadvantage because few of them have sufficient balance sheet size to make a covered bond worthwhile. A multi-issuer programme will enable the building societies to team up and provide enough assets to make a covered bond economic. Apparently five or six societies are already lined up.

Super Derivatives rates push

Super Derivatives has launched SD-IR, an interest rate platform aimed at providing interest rate market participants with accurate prices for plain vanilla and exotic products. "Since we launched our first product in 2001, we have had a huge impact on the currency options world," says chief executive David Gershon, who argues that history will repeat itself.

SD-FX was the first widely available FX options platform that disseminated accurate options pricing. Although a few market players had accurate currency options pricing capability in-house, most did not. Over four years SD-FX has become the benchmark pricing provider. Given the wide presence that the FX version now has on trading floors and at other institutions, few would bet that it will take as long for SD-IR to achieve a leading presence in the interest rate market.