Clearstream Banking has reached a agreement with the Bondholder Communications Group (BondCom) that aims to cheapen as well as improve communication between bond issuers and investors by shifting complex corporate actions such as tender offers, exchange offers, consent solicitations and restructurings on to an electronic platform.
BondCom has formed an ‘Issuer Services Agency’ to provide the new services for issuers communicating with bondholders and to reduce the expenses related to paper-based processes. The services have already been tested in a number of recent restructuring events and will now be launched on a global basis, with Clearstream providing operational and technological support.
“Clearstream and its 2,000 customers will benefit from the streamlining of the existing processes, with the use of BondCom’s innovative electronic solutions,” says Robert Apfel, President, Bondholder Communications Group. “This service will offer pragmatic solutions to both issuers and custodians, and we are very pleased to be working with Clearstream.”
Clearstream says it will work with Bondcom and debt issuers to create standardised procedures and IT enhancements to improve efficiency levels and automation rates. Clearstream will reconcile the customer instructions and their positions in an automated and secure environment which the Luxembourg-based ICSD believes will improve efficiency in the distribution of information to and from bondholders.
The services will focus on cost reduction, with debt issuers’ costs to be reduced by as much as €100,000 per initiative, says Clearstream, by saving on printing and delivery of documents. The services will complement SWIFT messaging formats with additional Internet-based communication methods that will enable bondholders to navigate through complex documents and to respond electronically to any required decisions. In addition, BondCom and Clearstream will seek to minimise the operational burdens and risks facing Clearstream’s customers across the world including custodian banks and broker-dealers.
“Clearstream recognizes the added value that BondCom’s new service will offer to the market, as significant operational efficiencies can be derived for all parties involved,” concludes Matthias Ganz, Chief Operating Officer, Clearstream. “We believe the service will substantially reduce the workload and risk faced by banks and brokerage houses.”
Bondholder Communications Group (BondCom) is a global bondholder communications specialist. With offices in New York, London and Hong Kong, BondCom locates, identifies and facilitates communications with bondholders, typically in connection with tender offers, exchange offers, consent solicitations and restructurings. It focuses on debt instruments only.