In a country in which the four largest banks dominate the market and effectively control access to corporate lending, institutional funders (life insurers, asset managers and the like) are generally not given the opportunity to lend directly to corporate clients. Whilst some institutional funders may be given limited access to corporate names, this is generally either:
- Through credit-linked note programmes - which mean that the funder is taking dual risk on both the issuing bank and the corporate. In many cases, however, these funders would prefer a solution without the dual credit risk inherent in a CLN programme; or
- Via syndicated funding facilities – where the institutional funder is most often a price taker and would have limited capacity to set the funding rate at which to lend.
On the other side of the table, corporate clients are heavily reliant on the local banks as their source of borrowing – even more so in the short term space. Consequently, these corporates become quite beholden to these banks and forgo a lot of their ability to negotiate on price. Those corporate clients who may have set up commercial paper programmes as a way to access the market directly still find these programmes operationally onerous and relatively expensive to operate.
We at Propell Financial Technologies are creating our debt solutions platform in order to address these issues. At the core, we aim to provide funders with an alternative way to access corporate credit at attractive yields. In parallel, we provide corporates with the ability to trade on best execution principles – by giving them full visibility across a range of funders on both the price and notional appetite for their name in the market.
To find out more about the benefits of our platform to both corporates and funders, please select from the buttons below.