BondAuction announces first issuer client
BondAuction and The Housing Finance Corporation have announced a partnership to use the tech startup's novel new issue process that aims to move beyond traditional syndication practices for non-government issuers by allowing investors to register their interest in deals directly on the platform with a precise bid.
The two parties have not yet outlined when they expect the partnership to bear fruit but are optimistic on its potential.
"Our partnership with The Housing Finance Corporation is particularly significant for BondAuction as not only does it bring the first auction issuances, but also realises the platform’s benefits for social good – helping to enable access to efficient financing for the affordable housing sector,” said Spencer Maclean, co-founder of BondAuction.
Former Citigroup and Standard Chartered syndicate heads Peter Charles and Maclean founded BondAuction in September 2021 as an auction platform for primary DCM. It aims to allocate bids at a single price to clear the deal using an open auction, not dissimilar to government bond auctions. However, the latter are dominated by sovereigns' key relationship banks, which typically buy all the bonds and redistribute them to end-investors. Maclean said BondAuction cannot exclude investment banks from a new issue as it is only regulated for the transmission and communication of orders and cannot settle or touch client money.
Over the past four years, BondAuction has launched several partnership projects, with the likes of LiquidNet and NowCM that would appear to broaden the appeal of the venture for market participants, but this is the first time an issuer has fully bought into the concept. THFC is a nonprofit, high-quality issuer that finances UK housing associations, but its bond issues are typically sub-benchmark size, for which syndication is less efficient.
Ben Rick, THFC's chief commercial officer, said: “We are a mutual that focuses exclusively on affordable housing in the UK. We have always innovated with the aim of achieving the best possible funding terms for the sector, allowing our housing association borrowers to grow and meet the demand for affordable housing. This partnership with BondAuction is a further demonstration of how we embrace innovation to achieve better outcomes for borrowers."
THFC said it has a loan book of nearly £8bn and the BondAuction partnership will support access to finance for the wider UK housing association sector with competitive pricing and easier market access.