See below for excerpts from a recent Euromoney feature. For the full article, see here.
New technology ventures and trading platforms promise compressed settlement times and improved liquidity in a secondary loans market increasingly dependent on non-bank investors.
Efforts to modernize the antiquated technology for trading loans and to upgrade the structure of the secondary loan market are finally gathering momentum.
Versana is a technology company founded in March 2022 by Bank of America, Citi, Credit Suisse and JPMorgan to capture in real time data from agent banks on syndicated loans into a central database and to ease the communication with loan holders, for example on early prepayments, shifting amortization schedules and covenant waiver requests.
At the start of October 2023, Versana passed a key milestone of more than 1,500 syndicated loan facilities and approximately $900 billion in global loan commitments on its digital data platform.
Cynthia Sachs, CEO, says: “With the seven leading agent banks on board, we expect to cover over 75% of the U.S. institutional markets by the end of the first quarter next year, and eventually over 90%. And we are now planning a more heavy focus on Europe next year.”
The firm used to describe its mission as being to transform the $5 trillion syndicated loan market. But Sachs now sees an even bigger addressable market of up to $7 trillion by adding private credit.
“Whether a large, floating rate loan is originated out of a bank or a direct lender / private credit fund, it’s still a loan with many lenders that require their pro rata share of cash flows. And so we’re happy to put private credit deals onto our platform to aid market coverage.”
“Versana is rebuilding the loan market from the ground up. But we can’t change a $7 trillion market by ourselves,” Sachs says. “For example, we likely won’t build a trading platform, but we would like to work with other service providers and vendors on that segment of the loan ecosystem.”