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Industry roundup: 28 October 2020

Bond dealers target municipals and corporates for post-pandemic growth

Near-zero interest rates and a continued need for liquidity among companies, states and municipalities struggling with the economic consequences of the COVID-19 pandemic should keep bond markets robust in 2021. That’s the expectation among middle market and regional fixed-income dealers, who are banking on municipal and corporate bonds as their biggest drivers of future growth, according to a survey by Greenwich Associates and the Bond Dealers of America of 21 regional and middle market corporate and municipal bond dealers in the US.

With the acute phase of the market crisis seemingly in the past, bond dealers are re-examining their operations to determine what worked, what didn’t and how to be both more competitive and manage risk more effectively going forward. The survey results reveal that middle market and regional dealers continue to see both municipal and corporate bonds as the largest areas for growth. Government bonds have become more attractive as well, with nearly one-third of survey participants expecting growth in that business compared to 14% in 2018.

Despite the increasing importance of technology across financial markets, the crisis revealed that dealer relationships and trust really matter to investors - not just for access to new issues or balance sheet, but for help in understanding these turbulent times. The survey results confirm that middle market and regional dealers see these relationships as both their biggest differentiator and the key to organically growing their business.

Nevertheless, capturing growth opportunities today requires significant investment in the IT platforms that play an increasingly important role in fixed-income markets and market structure. When it comes to technology initiatives, developing client management tools and more effectively managing data are still top priority for dealers and, on average, regional and middle market dealers spend over three-quarters of their technology budget on market data terminals, order management systems and market data alone.


Getlink successfully refinances green bonds 

Getlink has announced that it has successfully priced an offering of €700m in aggregate principal amount of its senior secured notes due October 2025. The offering, which was announced on 20 October, was very strongly oversubscribed. The offering will close on 30 October 2020, subject to usual closing conditions.

The notes were not made available to retail investors. The notes will be issued at par and interest will accrue at a rate of 3.50% per annum and will be payable semi-annually in arrears on each 30 June and 30 December, commencing on 30 December 2020. The notes are classified as green bonds, and rated BB- by Standard & Poors and BB+ by Fitch.

The company says it intends to use the net proceeds of the offering to redeem its existing €550m green bond and to finance capital expenditure in relation to the group’s ElecLink project and other eligible green assets. The offering is designed to further enhance the group’s very strong liquidity position, improving its financial flexibility and extending the maturity of its financing. BNP PARIBAS and Goldman Sachs International are the joint global coordinators and active bookrunners, and Société Générale the joint bookrunner.


PCBB joins SWIFT gpi network

PCBB has said it is the first bankers’ bank serving community-based financial institutions across the US to launch SWIFT global payments innovation (gpi) service. SWIFT gpi looks to provide faster cross-border international payments to community financial institutions and their customers.

Using SWIFT gpi, PCBB will provide its international banking clients with faster payment processing, greater transparency of fees, instant tracking of payments, and unaltered details of remittance information. The service is available to use through PCBB’s cash management platform, and the bank has said that additional enhancements are coming next year. 

“By joining SWIFT gpi, PCBB has demonstrated its significant commitment to delivering an improved cross-border payments service to its clients," said David Scola, chief executive of the Americas, UK and Ireland at SWIFT. "SWIFT gpi is improving the speed and transparency of payments, helping clients achieve greater efficiencies, and ensuring certainty in international payments."

“Launching this faster global payments service to our clients gives them a best-in-class payment solution at no additional cost,” said Patricio Morillo, senior vice president of International Services at PCBB. “Our customers will become even bigger champions to their small business customers by providing quicker payments on goods and services, reducing exposure on FX risks, and strengthening relationships with their business partners, to name a few key benefits.”

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