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Frequent issuer MTNs: eFunding proves that size matters

Eksportfinans hopes funding costs will plummet if online execution of structured products grows popular

Oliver Siem and Soren Elbech: 
removing the bottleneck

Norwegian export finance agency Eksportfinans has launched a portal that seeks to trigger a wholesale transformation in its private placement/structured product programme. The scheme aims to automate standard structured product transactions by enabling dealers to request a real price electronically. Once dealers enter various parameters they are issued with a mandate that holds for 24 hours. No borrower has previously managed to complete such a project, which has the capability of seriously shortening the time it takes to perform trades, providing the borrower a welcome boost in its efforts to reduce its financing costs while increasing volumes.

All borrowers tilt their borrowing programmes to the small private placements from the MTN programme. The reasoning is purely economic – highly structured private placement offers issuers aggressive funding compared with benchmark or even non-benchmark bond transactions. But although the work involved in printing a $2 million ticket is little different to that for a $20 million one – the spread differential might be 20 basis points or even more.

MTNs, while offering highly discreet funding for borrowers, unfortunately suffer from important drawbacks.

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