LIFEMD INVESTOR ALERT: Class Action Lawsuit Filed


Wall Street Banks say it’s time for the credit market to drop the fax

(Bloomberg) – A corner of the debt capital markets known for continuing to send official notifications via email and even the occasional fax is facing a modern update. Bank of America Corp., Citigroup Inc., and JPMorgan Chase & Co. Keep Evolving A New Platform For The $ 4 Trillion Syndicated Loan Market That Gives Lenders One Place To Access Data Across Their Entire Portfolio. Currently, lenders receive a variety of updates on each and every loan, such as interest payment notifications and change requests. This is a headache for investors who often have to manually update this data into their own internal systems. “Our customers spend too much time following up every single agent bank to confirm and reconcile what they actually own, and this really gives them the power to do some of it themselves,” said Alex Naboicheck, director of the US Leveraged Loan Trading at Bank of America, in an interview. The credit market is one of the few pieces of funding that has been excluded from major technological improvements, has swelled in size and has been scrutinized by regulators. Of particular concern was the $ 1.2 trillion leveraged loan side used by private equity firms and other firms to push heavy debt on corporate balance sheets to fund buyouts. In contrast to bonds, loans are not registered securities, meaning the specifics of how the debt is structured and what disclosure requirements the company has depends on the legal documentation of the individual loans. The lack of standardization has made it difficult to centralize data. The new system aims to improve the back-end part of the process – how banks send notifications to lenders. Citigroup’s role as an administrative agent was examined last year after it mistakenly made a $ 900 million payment to lenders. However, this new platform would not prevent this error from occurring. While the new tool is not involved in trading, current data could ultimately lead to improved liquidity and notoriously long settlement times – an average of 18.6 days in 2020, according to the Loan Syndications and Trading Association or LSTA. Better Plumbing for Syndicated Loans – Debt which are sold to a group of lenders – a bank acts as the administrator who keeps the back office records. The new platform would build on the banks’ existing in-house software that tracks every loan and consolidates all current data in one place, allowing investors to communicate with banks more efficiently, ”said Lee Shaiman, Executive Director of LSTA, in an interview. “The pipes will flow better.” The new, yet to be named platform has been in work since the beginning of 2020. The three banks want to officially introduce it in early 2022 and plan to invite their colleagues to join. The new platform would work for leveraged loans as well as revolving credit facilities, bridging loans and bank term loans. In 2020, Bank of America, Citigroup and JPMorgan acted as management agents for 74% of all new investment grade US corporate bonds. and around 37% on all new leveraged loans, according to Bloomberg ranking data. The platform is the latest in digitization of the debt capital markets and follows a separate partnership between Bank of America and Citi to create a new platform for executing fixed income deals initially focused on the secured loan obligations market. Nine of Wall Street’s largest banks launched a new bond ordering system in November that could transform the way trillions of dollars in corporate debt are marketed and sold to investors. “Said Andrew Murray, director of the market infrastructure and fintech investing team at Citigroup. “This initiative continues this issue in the credit space, which is one of the areas where there are more manual challenges compared to other asset classes.” Centralizing and updating this data could ultimately result in shorter settlement times and could potentially result in faster settlement times, Jenny Lee, Head of Leveraged -Finance Capital Markets at JPMorgan, said in an interview: “One of the main causes of long settlement times in the credit market, particularly the improvement in liquidity and support for growth in an asset class that has been booming in recent years. Compared to the bond market, there is a lack of timely, dynamic and high quality data, ”said Lee. “What we believe is necessary to initiate this transformation is an overhaul of the way lenders access their credit information and digitize the connection between lenders, agents and other service providers involved in processing the loan . ” For more articles like this, visit us at Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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