Raja Palaniappan, co-founder and CEO of Origin describes the platform as LinkedIn for the bond market. “It’s where issuers and dealers meet, where they can find opportunities on the marketplace, automate all of the trade documentation, and manage post-trade communication,” he says.
The SSA market is home to some of the largest and most frequent issuers of MTNs and private placements, and where the option to use Origin’s marketplace product to post funding levels for both vanilla and structured MTNs, and then streamline the paperwork was most immediately value-added.
“Conceptually, it made sense to start at the EMTN level because that’s the simplest distillation of a bond issuance,” says Palaniappan. “What initially struck me was how slim the margins are for dealers in the MTN business compared to the admin that’s required to support each issuance — it’s completely out of line.
“It’s still a business that banks want to do and an important service they provide to their issuers who rely on the funding and pricing benefits, but there’s just this huge cost base that technology could completely eliminate.”
Origin’s documentation and post-trade products offer the same advantages to syndicated issuance.
“The concept of eliminating unnecessary admin is exactly the same when you’re doing trade after trade,” he says. “From drafting a term sheet, to circulating final terms, to obtaining an ISIN, to notifying paying agents, to listing on exchange — it can all be completely automated.”
In March this year, the firm celebrated completing the first fully digital listing of a debt security on the Luxembourg Stock Exchange, with Banque Internationale a Luxembourg issuing a €10m tap of an existing senior note via dealer Deutsche Bank. LuxSE built an API that allows documents created on Origin to be shared with the exchange so that the issuer doesn’t need to do anything except select the exchange as its listing option on the platform.
The first fully digital bond to be issued on the platform had come in June 2019 when Citi privately placed a A$30m green bond for Swedish social housing firm Vasakronan. That was followed in October 2019 with the first fully digital certificate of deposit, a HK$100m issue from China Construction Bank placed by Crédit Agricole CIB.
But the big breakthrough came last year, when Crédit Agricole issued the first benchmark bond using the platform, a €1bn social bond. The documentation was automatically and digitally drafted, including the term sheet, final terms, subscription agreement, and signing and closing agenda.
“The group working on a syndicated transaction is larger within an institution. And so, each time we’ve done one, it creates more buzz within the market simply because there are more people users logged into the platform interacting on the deal to make it happen,” he says.
Palaniappan says that’s Origin’s biggest achievement over the last year — although as a founder he can’t help but be proud of completing the company’s $7m Series A funding round which was supported by Clearstream and Luxembourg Stock Exchange.
“That was the culmination of probably two years’ discussions and negotiations and it is fantastic validation,” he says. “In the start-up world, funding milestones get a lot of airtime but I think that they should always be viewed as a facilitator, not as the destination. Client traction should be the destination, so for us the first public digital syndicated bond was really important.”
The firm now counts more than 90 issuers and 20 dealers as clients. Given the plethora of competing tech platforms that have sprung up over the last couple of years, that client list is helping put it in pole position in the race for critical mass
The traction it has got also shows that it has closed what Palaniappan calls the “massive gap” between the identification of a problem and the successful conceptualisation, build, deployment, and adoption of a solution. “When we started out six years ago, we were almost the only ones out there and essentially had to convince the market there was a problem that technology could fix. Now, customers complain of platform fatigue but we’re confident — because we’ve been through the journey — that we can deliver what we promise.”