Fixed Income Pulse: Digitisation of Debt Capital Markets
- LSEG (London Stock Exchange Group) successfully priced a syndicated multi-tranche and multi-currency offering raising c.$7bn equivalent across nine tranches.
- Flow was used for the first time to conduct key transaction steps by deal parties.
- Flow is LSEG’s new digital platform to drive end-to-end automation in primary debt markets, developed in partnership with Nivaura.
- SparkLive Roadshow was used to conduct extensive investor marketing, and now can be used for all capital markets transactions.
- This is the most complex transaction to use a primary DCM digitisation platform.
LSEG successfully completed multi-tranche and multi-currency offerings raising c.$7 billion equivalent in USD, EUR and GBP under its newly established £10 billion GMTN programme – this was also its first USD Reg S/ Rule 144A issuance.
London Stock Exchange's new digital platform, Flow, was used for the first time during the issuance process. Flow is designed to automate the debt capital markets issuance process using structured data and General Purpose Legal Mark-Up Language (GLML). LSEG's SparkLive Roadshow was used to host the deal investor roadshow.
This bond issuance marks an important milestone in capital markets automation and digitisation and demonstrates the potential of such platforms to improve current capital market workflows.
Barclays, BofA Securities, Citigroup and HSBC acted as joint global coordinators for the offerings. Freshfields Bruckhaus Deringer LLP and Linklaters LLP acted as counsels to the issuer and dealer respectively, and HSBC Issuer Services was the issuer’s appointed trustee and paying agent. The bonds were listed on the Main Market of London Stock Exchange, and settled in DTC, Euroclear and Clearstream.
Deal at a glance
Comments from deal parties
Anna Manz, Chief Financial Officer of LSEG said: “We were very pleased by the strong global investor demand for the recent c. $7 billion notes offering under our GTMN programme. Using SparkLive Roadshow and LSEG Flow was particularly important in enabling the multi-tranche, multi-currency offering in the current virtual environment. Working with investors, banks and legal counsel, we were pleased to see the benefits of digitising the capital raising processes first-hand.”
Travis Barnes, Global Head of DCM at Barclays said: “This was a milestone transaction from LSEG – its largest bond yet – and Barclays was privileged to support it as the global arranger on LSEG’s GMTN programme. Our teams used LSEG Flow to help draft and agree the deal and legal documentation, simplifying a syndicated transaction across multiple banks, currencies and tenors. Barclays was pleased to support the first transaction on LSEG Flow and is committed to supporting end-to-end automation in capital markets.”
Adam Bothamley, Global Head of DCM at HSBC said: “HSBC was privileged to work closely with LSEG as one of the global coordinators, and to support the first transaction on the LSEG Flow digital platform. At HSBC, we strongly believe in the value of structured data through the lifecycle of a bond. Working closely with counsel and the other global coordinators, we were able to share deal documents in real time, and facilitate the intake of structured new issuance data at HSBC Issuer Services (acting as Trustee and Principal Paying Agent) for this large and complex deal. We are keen to see more issuers globally take advantage of such opportunities in debt capital markets.”
Phil Drury, Head of EMEA Banking, Capital Markets & Advisory, Citigroup said: “Citi was delighted to work closely with LSEG as one of the global coordinators on this transaction, and engage closely with the LSEG Treasury and Capital Markets team as we used new and innovative tools to support the capital raising process.”
Elaine Keats, Partner at Linklaters said: “Linklaters was delighted to act as bookrunners’ counsel on this milestone transaction for LSEG and support the successful execution of the transaction using LSEG Flow, driving innovation in capital markets. Linklaters has been closely involved in the creation of GLML as a protocol for structured deal data and are pleased to see it being used in a significant debt capital markets transaction.”
Duncan Kellaway, Partner at Freshfields said: “We are pleased to have advised LSEG again on their successful bond issuances. Freshfields not only acted as counsel on LSEG’s GMTN programme but we were excited to have had the opportunity to help support the first complex transaction on LSEG Flow, aligning ourselves with LSEG’s ambition to drive end-to-end automation in capital markets.”
Dr. Avtar Singh Sehra, Founder and Chief Executive Officer of Nivaura said: “It has been an honour for Nivaura to work closely with the LSEG team, and through the support provided by Allen & Overy, in bringing the LSEG Flow platform to market and supporting its launch with LSEG’s debut multi-currency and multi-tranche transaction. This is the start of a new digitisation and automation paradigm in the primary capital markets, where the LSEG Flow platform delivers proven technology to drive efficiency and effectiveness for all market participants.”
In detail – Flow & GLML, an industry standard for structured primary data
LSEG Flow is a primary debt capital markets issuance platform, that seeks to bring together all participants in the issuance of a bond under an MTN programme. Flow uses General Purpose Legal Mark-up Language (GLML), an industry protocol, to capture transaction data in a structured way and disseminate it across internal systems and to third parties. Allen & Overy, Clifford Chance, Linklaters among other law firms have driven the development of GLML, together with partners such as LSEG, Nivaura and the GLML Consortium.
In this way it can be used to automate the drafting of transaction legal documentation and helps to address the structural inefficiencies as part of the currently highly manual capital markets execution process.
- As part of London Stock Exchange Group’s circa $7 billion multi-tranche, multi-currency syndicated transaction:
- LSEG’s GMTN programme was prepared and tagged in GLML in partnership with Barclays, the programme arranger, Linklaters, counsel to the dealers and Freshfields, counsel to the issuer with Nivaura
- The global coordinators and counsels were then able to closely interact on the platform and prepare term sheets across all of the tranches in a secure environment ahead of the transaction announcement.
- HSBC Issuer Services as IPA was also configured to access deal documentation from Flow to assist in processes related to settlement and securities issuance.
- Once pricing was agreed, data created by the advisors within the deal documentation was able to feed into fully drafted final terms documents automatically, thus avoiding duplication.
This meant that these processes were significantly streamlined and allowed for increased automation and time saving as the execution process was underway.
As part of the roadmap for future releases, Flow will also have the ability to interact in this way with all key transaction counterparties, including listing venues, and share data in a secure yet streamlined way that allows for straight through processing.
Find out more about Flow and watch the introduction video here.
Investor engagement via SparkLive Roadshow
As part of the transaction, LSEG also undertook significant investor marketing by way of a multicurrency roadshow over 1.5 days with European, US and Asian accounts and utilised LSEG’s innovative digital solution, SparkLive Roadshow.
SparkLive Roadshow is LSEG's digital solution for delivering hosted roadshows for the investment banking community and issuers of both debt and equity. It offers cross-asset roadshow services, providing issuers and their advisors a technology led solution for deal or non-deal roadshows.
Take up of the roadshow was exceptional with a significant number of global accounts registering to view a pre-recorded investor presentation and access deal information materials.
The strong investor appetite created significant interest, thereby allowing final pricing to be tightened by 20-25 bps across all tranches, resulting in a weighted average coupon achieved across the nine tranches of 2.11%, alongside a weighted average maturity of 8.8 years.
More information about Flow and SparkLive can be found on our website.