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The three banks, which together arranged more than $1tn of bond sales last year, want the new platform to improve communication between underwriters and asset managers.
Corporate bond issuance is a leading driver of bank revenues and has become increasingly important since the financial crisis, with low interest rates spurring a borrowing splurge. Underwriting fees have partially offset a decline in trading revenue, which some executives fear is in a secular downturn.
A slowdown in corporate debt issuance at the start of 2018 has threatened underwriting fees, magnifying the importance that banks contain costs in their bond sales units.
The debt sales process can be complicated from the initial delivery of prospectuses to the management of investor roadshows all the way to pricing, when teams of bankers must reconcile orders from hundreds of investors before settling the transaction.
The phone calls, emails and chat messages on Bloomberg had become overly cumbersome and time intensive as the bond market has ballooned in size, said several people involved in the project.
The product will allow underwriters to send bond documents and credit rating reports to investors, relay pricing information, and ultimately collect both indications of interest and firm orders for bond sales.
JPMorgan, BofA and Citi have not yet decided what form the new platform will take. They are considering an online-based application, a program that can be installed on investors’ computers or one that is integrated through an application into existing asset manager order management systems.
The three banks declined to comment on the project.
Full article on Financial Times (subscription required)