BlackRock Strikes Deal With Banks to Provide Closely Held Bond Price Data

Corporations have issued enough investment grade US bonds this year to break four monthly issuance records. But, if you wanted real-time prices for one of these coveted assets, you might still have to get a financial advisor to call up a broker-dealer bank as if it were 1984.

On Monday, a handful of banks reportedly took a step to bring the closely guarded pricing data into the 21st century, inking a deal to make it available through BlackRock’s investment software Aladdin. Like it’s 2024.

You Can Quote Me On That

Corporate bonds, issued by companies to raise capital, have higher yields than government bonds, making them an attractive investment (caveat emptor: with those higher yields comes higher risk). But, while a few are traded on exchanges or digital platforms, most are still handled over-the-counter (OTC) between large broker-dealers.

This has proved a disincentive to modernize or open up to digital, real-time data transparency — banks and dealers consider pricing data a competitive advantage, so they shield it. Regulators have called for more openness and Blackrock’s deal will mark a shift in that direction. More than three dozen dealers will offer licensed, attributed quotes for investment-grade and high-yield US bonds through BondCliQ, a corporate bond quote system. Among them, Bloomberg News reported, are Bank of America, Morgan Stanley, and JPMorgan Chase. It comes as corporate bonds are having a burner year:

• Corporations issued more than $1.4 trillion in investment-grade US bonds as of September 28, which is on track for the second-busiest year ever, according to Goldman Sachs.
• One key driver has been mergers and acquisitions: Goldman noted US investment-grade bond sales tied to corporate M&A are on pace to be the highest since 2019. “We feel that a resurgence in M&A activity is integral to the issuance of more corporate bonds supporting M&A deals,” wrote Breckinridge Capital Advisors, noting a 25% year-over-year increase in M&A during the third quarter.

It’s Grow Time: More interest rate cuts and US economic growth would help the trend, said Goldman’s Investment Grade Syndicate head John Sales: “You’re seeing growth in the economy. You’re seeing growth in corporate America. You’re seeing growth of the balance sheet. And as companies grow, they issue debt to finance that growth.”