UK credit data provider Mark-it Partners plans to offer a convertible bond pricing service by the end of March, to complement its credit default swap, cash bond and syndicated loan pricing services. The move comes as seven of the company’s main backers exercised options to each purchase a 5.19% stake in the St Alban’s-based company.The investment by ABN Amro, Citigroup, Dresdner Kleinwort Wasserstein, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS makes Mark-it’s immediate future secure. It comes after an initial investment in the company by TD Waterhouse, followed in February last year by Deutsche Bank, Goldman Sachs and JP Morgan Chase becoming equity holders after their sale of Red (a credit derivatives reference entity and reference obligation matching service). Later in the year, Bank of America and Credit Suisse First Boston secured stakes in Mark-it when it purchased syndicated loan data provider LoanX.
Mark-it chief executive Lance Uggla declined to provide the dollar value of the new 36% equity investment. But he said the company could now handle two small cash acquisitions – deals valued at less that $10 million. He added that Mark-it was now closed to additional investors unless they joined as partners during a strategic acquisition. This means banks such as Barclays, BNP Paribas, Bear Stearns and HSBC will remain clients of Mark-it but not shareholders.
The company plans to launch a convertible bond pricing service by April. It is developing this in-house with the help of a number of its bank backers. It also plans to re-run its data to create a cleaner and deeper historical set of credit default swap prices – essential for bank risk management and modelling. Mark-it is also offering bi-monthly prices on synthetic collateralised debt obligations (CDOs), tranches of CDOs and CDO baskets. It also provides prices on single-name credit default swap options and options on credit derivatives indexes.
Mark-it already offers almost 2,000 individual credit default swap price curves on a daily basis, and plans to increase this number to 2,500. It wants to offer customers a complete set of credit information on any single company by mid-year. Uggla says his preferred method of delivery is via the internet. This full service is likely to include news feeds.
Uggla said Mark-it is also developing joint ventures with credit software analytics providers to improve its data feed connections into financial institutions. Likely partners include: Algorithmics, Infinity, Moody’s KMV, Reuters, RiskMetrics, Standard and Poor’s, Summit, SunGard and Thomson Financial.
The final part of Mark-it’s credit platform development this year is to offer independent portfolio price evaluation. This would mean financial institutions could use Mark-it to provide third-party valuations for their entire credit portfolios – something that is increasingly important due to regulatory and accounting changes. To achieve this, Mark-it needs to either purchase or develop sophisticated credit portfolio models.
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