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Apple Cuts Back on Bond Buying in Advance of Bringing Cash Home – Bloomberg

Full Article: Bloomberg

About $157 billion of Apple’s $285 billion in cash, mostly held overseas, is invested in corporate debt, making it a leading lender. The cutback in buying, echoed by other tech firms with sizable overseas holdings, such as Alphabet Inc and Oracle Inc., could have an impact on corporate borrowing costs.

Treasury Traders Shy Away From Order Books – Greenwich Associates 

Full Article: Greenwich Associates

A question we posed in a recent research study to the buy side was, first, do you trade on-the-run U.S. Treasurys via an order book?  95% said no. We then asked if they thought gaining access to an order book market for U.S. Treasurys would improve their over execution quality – only 16% thought it would.

Comments
  • Slider
    SliderFebruary 2, 2018"If I am understanding this correctly, the Greenwich study is based on 26 respondents and unclear if the 15-20% that chose not to respond are part of the 26. Given the conclusions Greenwich is willing to make on such a small sample, I think it is safe to assume the respondents are amongst the world's largest. Therefore surprised to read "It is very possible that many investors just don’t know what they’re missing". The largest money managers in the world are that unsop…"

Mending Market Making: How to Reverse the Corporate Bond Dealer Slump – ViableMkts 

Full Article: ViableMkts

There have been numerous false assumptions about what methods would help dealers achieve success in the new market. Institutions that plan to revive their bond market-making business lines must identify which fundamental changes have rendered some traditional business practices obsolete.

Comments
  • Slider
    SliderJanuary 29, 2018"The article was interesting and thought provoking but my comments have clearly hit a nerve! Personally, I am confused when the author states; "Let me make this as plain as possible.... The more information dealers have ...on... prices, the less apt they are to bid through the offer side or... print customers at mid-market". Dealers are being aggressive when printing clients here, not making mistakes, so how does having others "true prices" make it less apt to happen?…"
  • ChrisWhiteJanuary 28, 2018"Ahhh. Finally some controversy on the FNL comment board. Since I am the author, it would be my pleasure to enlighten Slider…and correct him/her. I do not imply that equal access would give dealers confidence to make a similar price. Getting access to the prices being made will give dealers the ability to make INFORMED DECISIONS when trading. I don’t understand why this is so hard to comprehend and chalk the pushback to cultural blindness. Let me make this as plain as…"
  • Slider
    SliderJanuary 27, 2018"A nice rundown of thoughts and observations but must disagree with the authors suggestion #3. Dealers gather information from a variety of sources with buy side clients being the most important. Taking this proprietary information used to make prices/markets and give it away to other dealers for the purpose of "equalizing access to pre-trade institutional pricing information" across dealers is nonsense. The author implies that if dealers had access to other dealers pr…"
  • Wolfman
    WolfmanJanuary 26, 2018"Here's another change in our markets. Not that long ago, you'd have to pay thousands to get such isightful research on our marjets. Well done Chris! Whilst you make some great points, I think it's important to note that there are solutons gaining traction in our markets to help dealers adapt to the changing times. There are times when Dealers should, and do, put captial at risk to service their clietns and other times when they don't need to. For example, Dealers want…"

Bond Traders Aren’t Immune to Automation, Goldman’s CFO Says – Bloomberg 

Full Article: Bloomberg

Chavez, the bank’s chief financial officer and a former Silicon Valley startup founder, said that part of a spending push has been devoted to analyzing how traders, salespeople and support personnel work, and automating those processes.

Comments
  • Charlie
    CharlieJanuary 20, 2018"I agree, Wolfman. I think this is a defensive play by GS. And they should be doing it. Why let MarketAxess and LiquidNet and the myriad other recent startups slowly eat your lunch from the odd-lots on up? Develop your own automated, electronic platform. Sure, there's some cannibalization, but you're mostly reclaiming business that would otherwise be lost to some other all-to-all platform.…"
  • Jester
    JesterJanuary 19, 2018"I feel like this headline is a touch misleading, which is completely out of character for the media. Given the timing of this article, I may be connecting dots that are unrelated, but this feels like in response to another lack-luster year for GS fixed income, the internal powers that be are looking to robots as the solution. The only problem with this automation strategy is that the buy-side is still very much dependent on human beings to do the large trades in fixed…"
  • Wolfman
    WolfmanJanuary 19, 2018"Is this news? The fixed income market is highly automated and supports many different execution methods appropriate for the particular product. It seems like Goldman may be playing catch up to the buy side, ie BlackRock, AB and others.…"

Fixed Income (Il) Liquidity in Focus – Markets Media 

Full Article: Markets Media

“Banks can’t do everything for us, nor should they,” he said. Electronic trading platforms and other alternative liquidity providers can help to the extent that they aggregate liquidity, but block trading remains a significant challenge, Prager said.

Comments
  • Goose
    GooseJanuary 12, 2018"I listened to a portions of the discussion. A few things caught my interest. As Jester noted, Citi said their client group is getting narrower. Barclays mentioned how important is is to be top 3, for seeing flow purposes, and dealers with niche businesses continue to get marginalized. On the flip side, you had commentary that said the ETF players are adding liquidity, some buysiders are talking to more counterparties, and all to all trading is making strides. Block tr…"
  • Slider
    SliderJanuary 12, 2018"I felt like I was at an industry conference listening to that crap yesterday although I must admit I did enjoy very much when Richie Prager actually said something like maybe “liquidity is not a god-given right”'for all bonds. I think most people would be in agreement with his but people were mostly speaking about the investment grade market, not high yield and muni's so assume his comment was made towards HG bonds. WOW! What happened to the Muni market or is that on…"
  • Jester
    JesterJanuary 12, 2018"A full day discussion on corporate bond liquidity and not one mention of the new issue market or the allocation process? Wow, just wow. Perhaps this is the reason that the representative from Citi said that in 2017 only 25 clients made up 60% of their volume. Could this be the same 25 clients that get the overwhelming volume of allocations on new issue deals? Why does this matter and what does it have to do with bond liquidity? Well, it stands to reason that if fewer…"
  • Wolfman
    WolfmanJanuary 12, 2018"Did I notice a shift in the message here? The buy side can't stand in at all time for dealers? The regulatory changes since 2010 created an environment that restricted dealers' abilities to take on risk and that's not the headline here? This is a great opportunity to tie together the impact that regulations have had on liquidity and press for action. Blah, blah, blah, blah, blah, blah...…"

Top Market Structure Trends for 2018 – Greenwich Associates

Full Article: Greenwich Associates

After years of debating trading protocols and what should be counted as “true” electronic trading, the debate will shift to who can provide the best data and derived insights that ultimately help both liquidity-makers and takers get their jobs done.

Comments
  • Wolfman
    WolfmanJanuary 5, 2018"This has been an eerily quiet year and who knows what 2018 has in store. Will it see a real crisis in cyber threats? I think that's always hanging over us like the imminent rift in the San Andreas fault. I think the ongoing march to data-driven decision making in the fixed income markets will continue as dealers back away from placing capital at risk. I agree that the regulators will have more of an effect than Congress on lightening the regulatory burden. What I don'…"

ING to Expand AI in Bond Trading – Markets Media 

Full Article: Markets Media

In addition to providing traders with a visualization of relevant historic and real-time data, Katana’s algorithms provide forward looking predictions of the price that will win an RFQ within a certain confidence range. Future developments include being able to price within Katana.

Comments
  • Goose
    GooseDecember 15, 2017"“Braje continued that clients are sending electronic RFQs more often and for smaller sizes. It is also easy for them to invite more dealers to participate so there is more competition” “Brahe continued that the tool allowed faster pricing decisions for 90% of trades, a 25% reduction in trading cost and that traders were able to offer the best price four times more frequently.” My curiosity lies in the following. If they are answering and winning smaller and smaller RF…"

Goldman Traders are Caught Up in a Bizzare, Tense Hedge Fund Battle – Bloomberg 

Full Article: Bloomberg

The flap was ignited by Blackstone Group LP’s credit unit, GSO Capital Partners, which is trying to convince the builder to accept a bond refinancing package. GSO’s plan would trigger payments on default insurance that it bought in the credit derivatives market.

Comments
  • Wolfman
    WolfmanDecember 8, 2017""On a technical level this is genius". So was buying insurance on British sailing ships that you didn't own! CDS are insurance policies and should have been regulated as such. I don't see how this could have possibly been the objective of the designers. You know, the more I think about it, it SHOULD happen. They all knew what they were getting into, and what the heck, lawyers have to eat too...…"

Everyone is Incentivised to Fix Corporate Bond Liquidity – Global Capital 

Full Article: Global Capital

A European Commission study has confirmed what every corporate bond market participant already knew was true – the market has a liquidity problem. Everyone is responsible, the EC says, but no one has any incentive to fix the problem. They need to pull together to improve liquidity while there is time. 

Comments
  • Jester
    JesterDecember 4, 2017"Is anybody else confused by the headlines on corporate bond liquidity. Major asset managers (see: Blackrock) used to complain that there was a massive problem, but then flipped to say everything was fine. US regulators (see: The Fed) have written passionately about how there is no corporate bond liquidity problem, but then turned on their own opinion to proclaim that there is a liquidity issue. Now comes the European Commission to proclaim what “every corporate bond m…"
  • Cougar
    CougarDecember 2, 2017"Liquidity benefited from a virtuous circle pre crisis but the regulators broke the market’s collective trust. It is encouraging the EC now recognises there is a significant bond market liquidity deterioration. There are flaws in the EC’s logic, which is as pity as it, in part, is responsible for the issues it now laments. Regulations implemented after the crisis have made it more difficult and less financially appealing for banks to attribute as much risk and investme…"
  • Slider
    SliderDecember 1, 2017"I hate this Slider name. Anyone else want to trade me? Tried and failed. I have come to the conclusion that people just don't get it and are trying to solve for something that cannot be solved. While increased connectivity helps on the margin, it is meaningless when it comes to a truly liquid market. The liquidity is what the liquidity is. It increases, it decreases, all depending on supply and demand. There are enough ways to bring buyers and sellers together but gue…"
  • Tried and failed.
    Tried and failed.December 1, 2017"Fragmentation is here to stay and in truth it should enrich the market by providing a wide range of protocols, workflows and functionalities. Equities manage to function perfectly well with fragmentation, why should Bonds be different? Apart from the obvious number of bonds versus low daily turnover argument that no one will ever solve, the solutions lie in more mundane origins. Connectivity, integration and data-normalisation. Take a moment to think what your phone d…"