Wednesday, May 11, 2016

Mark Gilbert — Russia Should Foment a Bond Market Revolution

Russia would like to tap the international capital markets for funds by issuing new bonds. Investment banks jockeying to manage the sale, though, have been warned off by the authorities in the U.S. and Europe because Russia is still subject to economic sanctions. This raises an interesting question: What if Russia, or any borrower, just bypassed the middlemen and sold its securities directly to investors?…
There's every reason to think that a new bond from a country that still enjoys an investment grade rating from at least one of the three major rating agencies would meet huge demand in this yield-starved world. So if Oreshkin is right, what does he need a syndicate of banks for? Why not go directly to the global investor community for money?
Good article about how bond issuance and sale is fifty years behind the times owing to bank profits (read "rent-seeking").

Bloomberg View
Russia Should Foment a Bond Market Revolution
Mark Gilbert

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