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Why I Came to BondLink: Showing Issuers the Path Forward
September 17, 2018
As a former issuer, I know firsthand the challenges of alerting and attracting investors to a bond sale. In my role as Executive Director of New York City Municipal Water Finance Authority, I had the resources to institute a sophisticated and robust investor outreach program, but we had to do it all manually – planning our annual investor event and organizing tours, sending invitations, and meeting one-on-one with investors. I couldn’t help but imagine there had to be an easier way to reach more investors.
And as the marketplace continues to evolve, the need for easier and more efficient investor outreach is becoming more important than ever. Just recently, Bloomberg’s Michelle Kaske wrote about the largest U.S. banks cutting their municipal bond holdings by more than $16 billion in the first half of 2018. The result of tax reforms is that these banks simply don’t need to hold as many munis. That means one of the biggest groups of buyers in a typical market is no longer as reliable for an issuer. What do you do?
If you’re an issuer looking to lower your borrowing costs, you have to drive demand for your bond sales. And with banks holding fewer munis, you have a lower number of buyers to attract. I joined BondLink less than two weeks ago, and every day I come to work I’m more and more confident that this company is the answer to these new market dynamics. BondLink provides the tools issuers need, from a customizable IR website, to unlimited roadshows hosted on the site, and investor analytics that enable issuers to better understand their bondholders’ interests. And all of this creates dramatic efficiencies across the market.
Plus, the BondLink platform enables issuers to tell their own story.
If you’re an issuer who doesn’t communicate directly with bond investors, then investors will turn to the only other source to provide context for the raw data they are consuming: the rating agencies.
Rating agencies are a necessary and important part of the process of accessing capital. The need of investors to garner a third-party evaluation of an issuer is never going to go away. Like the reviews of a product offered on Amazon.com, rating agencies’ opinions of an issuer’s creditworthiness help buyers evaluate a bond offering. But most importantly, investors want the agencies’ context for the issuer’s numbers and the interpretation of the numbers.
Despite the value of ratings, leaving that role up to the rating agencies is a shortcoming that can create a big exposure for issuers. Rating agencies will interpret an issuer’s financial position based on their own criteria, which can change over time. They can also emphasize one aspect of an issuer’s fundamentals and not another, and they often don’t really measure what’s not seen.
It’s easy to see that I’m excited to be here. I’m looking forward helping issuers realize the massive long-term impact of a robust investor outreach program, and I’m thrilled to know that the market finally has a single tool that can help issuers optimize their borrowing costs.