CASA sees efficiencies in Origin auto-docs

Origin Documentation, soft-launched in July 2020, automates the production of transaction documentation pre- and post-bond issuance. Origin worked with Crédit Agricole’s treasury and Crédit Agricole CIB’s Debt Capital Markets teams to completely streamline their issuance process for self-led transactions.

Since implementation, Crédit Agricole SA (CASA) has issued five transactions via Origin across senior preferred and senior non-preferred (SNP), including two €1bn-plus syndicated benchmarks.

The platform automates all necessary transaction documentation, including bond and swap term sheets, final terms, subscription agreements, paying agent letters and more. According to CACIB’s legal teams, the tool has reduced the time for drafting and processing documentation by 90%.

Bank+Insurance Hybrid Capital (BIHC): What did your issuance process look like previously? What problems were you trying to solve?

Guillaume Corral, medium and long term funding, London desk, CASA: We have complex bespoke term sheets for each of our asset classes (covered, senior preferred, SNP) and we spend a lot of time pre-trade getting the term sheet right. Our funding strategy involves a mix of benchmarks and private placements, but the private placement flow involves the same number of documents as a benchmark, both pre-and post-trade.

The main hurdles are:

  • The significant time and cost of all the documentation that is produced;
  • Multiple back and forth between issuer, dealer and their respective counsels;
  • The risk of divergence between term sheet and final terms;
  • The burden of manually producing the multiple documents, agreements and notices related to each issuance.

BIHC: How long would it take to process a new issuance from start to finish? How did that differ between a private placement and syndicated transaction?

Romain Beillard, director, DCM FIG, Crédit Agricole CIB (CACIB): Depending on the asset class, the new issuance process can be time-consuming, and is still very much manually executed. From the pre-trade to post-trade documents, a number of emails and documents are produced and exchanged.

When we do private placements, we regularly need to produce post-trade documents, such as a subscription agreement, signing and closing agenda, etc. External counsels are appointed in the case of public/syndicated trades, while for private placements our internal counsel will usually draft all post-trade documents, which can take almost a day to expedite.

BIHC: How does the Origin platform solve these problems?

Raja Palaniappan, CEO and co-founder, Origin Markets: Origin’s Documentation tool automates the production of all the necessary documentation that accompanies a bond transaction, including term sheets, final terms, ancillary letters, etc. We can take any document template and make it machine-readable — we then upload it to the platform and the platform creates a dynamic wizard, which guides a user towards populating all the necessary terms.

This documentation engine is overlaid with a bespoke workflow platform that is specifically designed around the debt issuance process. We have different user types (e.g. “DCM”, “dealer legal”, “funding manager”, “issuer legal”, etc), and the workflow tool guides each user in completing the tasks they need to do. DCM can quickly draft a term sheet, the funding manager can approve it and grant a mandate, and the legal teams can pick the trade up and draft final terms — all within minutes.

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Source: Origin Markets

BIHC: Are there any limitations to what the platform can do?

Palaniappan, Origin: The platform is built specifically around issuance off programmes (i.e. EMTN/GMTN, etc). This is because the documentation required for that type of issuance lends itself nicely to templating. There is a clear one-to-one relationship between the economic terms in the term sheet and how those terms are represented in the final terms. So for now, standalone issuance is outside the scope of the platform.

Additionally, for now the platform supports interactions between only one dealer and issuer on a transaction. However, over the course of the next few months, we will be releasing functionality to allow multiple counterparties such as other dealers within a syndicate, or even external law firms, to be able to connect and collaborate on a set of docs.

BIHC: How does the issuance process look like now that you are using Origin? How is it better?

Beillard, CACIB: The Origin platform makes the term sheet creation, including BBG TS and the IIIA process, much easier — it now takes us two or three minutes, since the bespoke templates have already been reviewed and validated by all parties.

Once the mandate is granted, there is no unnecessary back and forth emailing between all internal parties (legal teams, capital solutions team when necessary, syndicate) — everything is done faster and is more accurate, while all live modifications can be followed on the platform.

Another important element that could definitely bring value would be to plug internal tools into the Origin platform to avoid multiple entry of the same data.

BIHC: What was the hardest part of getting the product right for CASA/CACIB?

Palaniappan, Origin: The “magic” of the tool — automatically creating documents based on templates — was actually the easy part. What was harder was getting the user experience and workflow right.

Because there are so many participants and stakeholders in each transaction, there are so many different permutations of how a trade could progress, and so many edge cases and exceptions to account for. We spent a lot of time with the teams doing dry-runs and test trades, trying to iron out all the bottlenecks for users as they were working through a transaction. We hold ourselves to a very high bar when it comes to the UX (user experience) of the app — it needs to be incredibly intuitive for each user to know exactly what to do next. If anything, we believe that is one of our strongest USPs, as we have been co-developing the tool with our many dealer and issuer users for quite some time now, so we’re very confident in the flow.

BIHC: What are your ambitions for using the Origin platform in the future?

Corral, CASA: We have already used this for private placements in senior preferred and in benchmark issuances in SNP format. We are considering extending the scope of products that we would run on the platform across the capital structure, including, for instance, covered bonds and subordinated instruments, and also non-euro EMTN issuances.

We would like to be able to use this platform to connect different teams involved in the process of our primary issuances. We expect the use of the platform to save time (allowing for a shorter settlement period, potentially), reduce expenses, decrease operational risk, and increase control over structuring and documentation processes.

BIHC: What is the long term vision for future issuance on the platform?

Palaniappan, Origin: The ultimate benefit of Origin is the ability for us to structure transaction data so that we can automate settlement. We have integrations with many post-trade infrastructure entities already — such as our partners Luxembourg Stock Exchange and Clearstream — and we are building more every day. This allows us to feed transaction data down to their systems in a straight-through process that eliminates the need for lengthy emails and manual steps.

We view Origin as the “application layer” that brings together market participants and helps them originate, negotiate, and create new securities. This application layer sits on top of, and can interface with, whatever “infrastructure layer” participants choose to use. Today it may be the existing CSD (central securities depository) network; tomorrow, it may be on the Ethereum blockchain. Our vision is to ensure Origin is built to bring value to our customers today, while also planning ahead to ensure it continues to bring value to them as the market and infrastructure evolve in the coming years.

Case Study: Origin Documentation facilitates CASA’s inaugural €1bn social bond

Bespoke issuer-defined templates enabled the various parties to streamline the entire documentation process from pre-trade to post-trade

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CACIB DCM drafted four pre-trade documents electronically and received the approvals through Origin:

  • Indicative bond term sheet
  • Indicative BBG Termsheet
  • IIIA message
  • Final bond term sheet

CACIB legal drafted eight post-trade documents simultaneously through Origin:

  • Final terms
  • Subscription agreement
  • Payment instructions
  • Décision d’emission
  • Expense Side Letter
  • Accounting Letter
  • Signing and Closing Agenda
  • Certificate of No Material Adverse Change

Source: Origin Markets