Low-cost new issue platform starts up

LONDON, Dec 4 (IFR) - A new European private placement platform aimed at low-cost capital markets funding for small and mid-cap firms, has announced its first new issue, a €1m two-week commercial paper transaction from DZ Bank via ABN AMRO and DZ Bank.

Called the European Private Placement Facility (eppf), the platform aims to provide borrowers seeking volumes as low as €10m per transaction the same new issue functionality that is currently available only to large issuers, but at a fraction of the cost.

In a statement, executive chairman Robert Koller, went so far as to claim eppf has started a revolution in the standardisation of bond issuance.

“The platform excels in being easy to use, the savings in comparison to traditional bond issuance and the high degree of structural flexibility and speed.”

According to Koller, further transactions are being prepared for launch during the first quarter of 2018. Borrowers from across Europe and as far away as Australia, Japan and India, have already shown interest.

The eppf says that by standardising and automating most steps in the new issue process, such as documentation and settlement, it can slash costs by up to 80%.

Furthermore, it claims an ambitious reduction in the time to market for first-time issuers to around two weeks instead of months.

The test run deal proved the platform’s technical capabilities to potential issuer clients, according to Frank Scheidig, global head of senior executive banking at DZ Bank,.

In addition to commercial paper funding, eppf allows for long-term benchmarks and covers both private and public deals, with or without listing.

For occasional users, there is the option of a pay-as-you-print model, while frequent issuers can reduce the cost per bond through an annual subscription.

In contrast to blockchain-based attempts to reduce debt issuance costs by disintermediating banks from the process, eppf is based on allowing clients to maintain their current banking relationships.

In addition to ABN and DZ, other eppf partners include Berenberg, Commerzbank, DBRS, Euler Hermes Rating, Landesbank Baden-Wuerttemberg, Luxembourg Stock Exchange, Sanne Group, Simmons & Simmons, The Law Trust Limited and White & Case.

BNY Mellon was paying agent and the notes were settled through Clearstream, while the pricing referenced a firm mid-swap benchmark provided by Trad-X.

The platform, which is regulated by Luxembourg’s CSSF, is consistent with the Capital Markets Union action plan, which the EU has been pushing for several years to improve financing options for Europe’s firms. (Reporting by Helen Bartholomew; editing by Alex Chambers, Philip Wright)