TradeRisks is actively involved in both the raising and/or refinancing of capital markets debt. This includes both straight corporate bonds, project finance bonds and, before the financial crisis, securitisations. Our team has significant capital markets experience and is able to offer clients advice and full transactional services including placement and execution.
Since the start of the financial crisis, banks stopped all underwriting of bonds and also effectively stopped making secondary markets (i.e. bid offer spreads of 25 basis points on 30-year bonds do not constitute a secondary market).
The lack of underwriting on the part of investment banks for primary bond issues combined with no liquidity in many parts of the secondary market has reduced their role to that of “matched brokers”. Matched brokers do not need capital, which means that more efficient providers have entered the market for this and other functions, which were formerly the preserve of investment banks. This provides borrowers with additional choice and competition and is a development which is congruent with moves by regulators to create new direct lending channels between end investors and borrowers.
As such, sophisticated borrowers are increasingly willing to interface directly with institutional investors in the same way that they have previously done with bank lenders, a trend that is also supported by the authorities and investor community.