For a long time, we have been concerned by the common practice in Over the Counter (“OTC”) derivative markets of end users conducting all their hedging activity with a small group of their “relationship” banks.

Corporate finance theory has long established that companies should maximise their Enterprise Value no matter who the shareholders are.

Banks have traditionally provided funding and hedging acting as principals. The financial crisis has critically reduced banks’ appetite for risk, thus often reducing their role in several traditional investment banking functions to that of ‘matched brokers’.

Listed and Rated Notes through OTC Exchange

TradeRisks also provides its clients with the full range of advice and services required when undertaking these issues below the £150m typical benchmark issue size. TradeRisks acts as arrangers for these issues, which we refer to as rated and listed notes, via OTC Exchange, the platform set up by TradeRisks to allow a direct interface between sophisticated borrowers and institutional investors. OTC Exchange provides investors with access to multiple individual credits but with standardised terms and documentation and a common brand. Importantly, and in contrast to structured group vehicles, this route offers full credit transparency allowing investors to reflect their risk return appetite for different credits. The ability to approach multiple investors represents a better option for borrowers than the traditional bi-lateral private placement route where, after a long documentation negotiation process, the borrower was frequently left with the option to accept the terms a single counterparty was willing to agree to or to pay both parties' legal costs and pull out. TradeRisks' deal management expertise, standardisation of documents and ability to place issues directly with investors has enabled the costs associated with deals of this size to be reduced significantly.

Private Placements »