Bear Stearns postponed a Web-based reopening of its 6.50% notes of '06 (A2/A) Thursday, reportedly because of technical problems with its platform, according to several buy- and sell-siders. The $250 million deal was to be priced via DAISS, or Dutch auction internet syndication system, Bear Stearns' proprietary online bond trading and distribution platform, last Thursday afternoon. But, potential buyers say a glitch on the site prevented bidding on the bonds or seeing the electronic order "book" develop. Three buysiders who had planned to participate in the offering told BondWeek that Bear Stearns sales people told them there were technical problem with DAISS.
Bear Stearns fixed-income syndicate officials, however, deny that any technical problem occurred or that there were any password-related problems.Jacques De Saint Phalle, a senior official with the syndicate operation in New York, says the deal was pulled because of a spate of broker-dealer issuance last Thursday, and not because of technical concerns. Indeed, with Lehman Brothers, Goldman Sachs and Morgan Stanley Dean Witter issuing bonds last Wednesday and Thursday, there was much secondary activity within the sector. As of press time, Bear Stearns would not comment whether the deal would be re-offered.
Investors say the site repeatedly rejected customers' passwords, and the firm was apparently unable to remedy it through technical support by late Thursday. "It's a shame about this fiasco," said Jim Claire, head of trading at First Capital Group in Charlotte, who was interested in purchasing the paper, "because Bear has a really, really great system." Claire declined comment on whether he would bid on bonds if the deal were re-opened. "This was why humans are never going to be replaced on the Street," he reflects.
According to one buysider, who has used Bear Stearns system previously, the trouble began last Wednesday afternoon between 4:00 and 5:00 p.m., the time that Bear Stearns' sales force had instructed orders to begin being placed within the system. Many accounts simply had their access denied because of rejected passwords. This is perhaps ironic because Bear Stearns' system won plaudits from several buysiders. Sid Bakst, of Weiss, Peck & Greer in New York, noted that the snafu was atypical of Bear Stearns' system, which had been the source of a PR push by the firm last year, calling it "efficient and transparent."