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Enron Mail |
http://www.treasuryandrisk.com/issues/Nov01/01NOdriv.html
E-FINANCE Driving Direct CP Issuance New Product Lets Issuers Build Real-Time Market Picture By Susan Kelly Last December, Julie Nickoley, senior manager of commercial paper operations at DaimlerChrysler, agreed to work with Prescient Markets to develop a Web-based subscription technology service to help companies price and manage their commercial paper issuance. The goal: a system to provide real-time flow of short-term prices and a way to track investors and competing issuers. At the time, the global automaker and long-time direct CP issuer saw the possibilities as interesting, but not necessarily a priority. All that changed two months later, when DaimlerChrysler's CP was downgraded to A2/P2. Suddenly, big money-market funds, which once constituted 85% of DaimlerChrysler's market, were no longer buyers. Nickoley had an immediate need to figure out what other buyers existed out in the market to take their place, but it took her a day or two to get investor information out of the mainframe-based system she used to manage CP issuance. In October, the kind of capability Nickoley sought finally became available with the introduction of Prescient Funding Desk. Now we know for all customers what time of day they trade, what size of trade they normally do, if they come in through cpmarket or on the phone, says Nickoley. The customer analytics was the key. With the development of Funding Desk, companies can get information on prices, including fluctuations in competitors? CP rates and what investors are looking for in the market on a real-time basis. Funding Desk's pricing module provides short-term market rates from Prebon Yamane and CP rates from cpmarket.com, Prescient?s online platform for direct issuance of CP. In Tune with Market The advantages? Trades done on cpmarket.com flow automatically into Funding Desk, and Prescient says it is working on a link with Bloomberg that will bring in data on trades done on Bloomberg's CP platform. Companies can save on funding costs by using the data to target less yield-sensitive investors. They can also save money by knowing when competitors move rates and then matching those moves. Using Funding Desk, we're much more in tune to whether pricing is changing in the market, DaimlerChrysler's Nickoley says. Besides cost savings, issuers may simply want to keep tabs on their investors to ensure that no one investor holds too large a chunk, in order to lessen the risk of having to scramble to find other buyers if a big investor exits suddenly. Targeting New Issuers Laurent Paulhac, Prescient's president, won't give the price of Funding Desk, but says it varies based on the size of a corporation's CP program. So far only DaimlerChrysler and ChevronTexaco are using Funding Desk. Paulhac defines the market for Funding Desk as the 500 U.S. companies with more than $1 billion of CP outstanding. About 40 of those companies now sell some or all of their CP directly. But given the ease of electronic issuance and the support available on Funding Desk, Paulhac expects more companies will move toward direct issuance via the Web. In fact, officials at both Prescient and Bloomberg say they were already seeing more interest in their platforms for direct issuance from companies that traditionally placed their CP through dealers - even before Funding Desk's debut. If those companies are going to sell paper directly, they're going to need something on the funding desk or treasury operations side to account and process and transact, says Craig Dukes, North American manager for short-term funding at Ford Motor Credit. Funding Desk is a perfect fit for those people. Laurent Paulhac Prescient Markets, Inc 914-989-3111 (W) 445 Hamilton Avenue 914-422-3693 (F) White Plains, NY 10601 914-715-4060 (M) Please visit us at http://www.cpmarket.com
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