Having worked since 2015 to bring fintech to the primary debt capital markets for regular borrowers off MTN programmes, Origin today launched the beta version of its private placement issuance platform, with six dealers and over 20 international borrowers.
The platform allows borrowers to distribute target funding terms to their chosen dealers from among the first six investment bank participants: BNP Paribas, DekaBank, Bank of America Merrill Lynch, Société Générale Corporate and Investment Banking, Credit Suisse, and Danske Bank.
The Origin platform is also a workflow tool, helping the issuance process by automating cross-currency calculations, generating runs, and producing term sheets. Ben Powell, Head of Funding for IFC, says: “The private placement market is a very important part of our overall funding strategy. Origin simplifies what was once a manual process prone to inefficiency. It allows us to manage our dealer communication in one central place.”
Origin also hopes to facilitate new business between frequent borrowers and banks that had no previous relationship. Raja Palaniappan, the co-founder of Origin, says: “We are thrilled to have such broad-based early support for our platform across the European MTN market, and we are already seeing a healthy pipeline build up for 2017.”
Joakim Holmstrom, head of funding at Municipality Finance, says: “We see a large potential in Origin. It is not only a very useful platform to make the whole MTN issuance process more efficient. In our strategy to diversify and expand our investor base, Origin is a great tool to access a broader range of new dealers who have access to local pockets of demand.”
It is notable that the first group of dealers onto the platform includes not just global and European bulge bracket investment banks such as Bank of America Merrill Lynch and BNP Paribas, but also DekaBank, which brings potential placing power into German savings banks. While DekaBank might not have had the budget to build a classic debt capital markets coverage model to deploy that placing power, a new platform using cutting-edge, cloud-based technology with bank-grade security measures gives it a new low-cost opportunity.
An added advantage of the Origin platform for borrowers is that they can compare their funding levels to their own and their peers’ yield levels in the secondary markets.
Borrowers in on the beta-phase – Origin expects a full launch of the platform later this year – included some of the biggest multi-laterals and financial issuers: IFC, Inter-American Development Bank, SEK, Municipality Finance, Nordic Investment Bank, Bladex, NWB Bank, Investec, AKLease, Rabobank, Berlin Hyp, pbb Deutsche Pfandbriefbank, Hitachi Capital UK, Korea Development Bank, and others.
A much broader range of investment banks and borrowers than those on the initial beta launch will be studying it for any indications of how new fintech applications might transform the primary capital markets.
This is no obscure niche that Origin is launching into. The European MTN private placement market accounts for about one third of the roughly €1 trillion of investment grade debt raised each year in Europe, often allowing borrowers to achieve better terms than on public bond deals while permitting investors to match maturities and terms to specific portfolio requirements.