Europe’s high grade corporate bond market is too busy for deal roadshows. On two separate days over the last two weeks, at least nine tranches have been priced. And with issuance windows tightly defined by the impact of central bank policy announcements and inflation data, smart issuers are taking to the road when they don't have borrowing to do keep investors up to date rather than trying to do everything at once.
It is no coincidence that so many deals come in short clusters. Since central banks withdrew their monetary support for the markets, economic data now has a real effect on investor confidence about where interest rates and bond prices are headed.
That incentivises all lead managers to herd issuers into days when the market is feeling good about itself and where there is no risk of any macro nasties leaping into view and ruining everything for everybody.
This presents a quandary for borrowers — how to live in investors' heads rent-free so that when the time comes, they can make a quick decision to buy their bonds. The usual method of holding a roadshow for a few days ahead of pricing, giving investors a day to chew on the numbers and ending in a crescendo of book building and spread tightening is far less viable. In short, if everyone hits the road at the same time, it only results in a traffic jam: an indistinguishable mass of vehicles honking in frustration.
Even tech cannot help. Investors may prefer virtual roadshows these days over physical ones as they do not have to travel anywhere. In reality, investors still struggle to find the bandwidth to attend every roadshow, even if they do not have to move any further than their home offices.
Step forward the non-deal roadshow. Traditionally the deal-specific roadshow's dull cousin, it should now be considered the key bit of marketing for companies looking to beat the rush to market.
Finding a time to meet investors when they have capacity to pay attention gives smart issuers a chance to explain their credit and their borrowing plans. There is more time to become familiar with each other, to put credit lines in place if necessary and to gain approvals. All of that adds up to making one's credit an easy buy when an issuer is in the market, which could well give it an edge over other borrowers on the same day.
Issuers may prefer to present themselves to investors in the best possible light as close as possible to opening books, cutting the risk of circumstances turning against them in the meantime but that is to let perfection be the enemy of good.
Furthermore, the non-deal roadshow option gives issuers greater choice over timing their deals. Not only do they not have the pressure of trying to bring a deal right after marketing, risking the feeling of being committed to a deal that might be better off postponed, but they can wait until they're not competing for attention, meaning investors can actually listen, rather than keeping half an eye on the eight other trades in the market that day.
In a market where so many borrowers simultaneously clamour for attention, a funding official who has prepared the ground well in advance can expect to harvest a far better order book and pricing if they have made life easy for their investors.
The approach might not be quite as exciting as tearing around the world's financial centres gathering pricing momentum, but in these markets it is worth its weight in basis points.