Bank of America and Citi have joined JP Morgan, Credit Suisse, Morgan Stanley, Moody’s Analytics, Goldman Sachs, and Wells Fargo to launch an independent company, Octaura. Octaura’s primary goal is to develop the first open market electronic trading platform for syndicated loans and some collateralized loan obligations (CLOs).
Built carefully in partnership with Low-code software development platform Genesis Global, Octaura will offer electronic trading protocols for price negotiations, straight-through processing (STP) used for trade booking, and data and analytics features supplied by Moody’s Analytics.
Octaura started as a joint incubation and co-development initiative between Citi and Bank of America, within its Sprint (Spread Products Investment Technologies) team. Citi’s internal Velocity CLO eBidding platform and BofA’s Instinct Loan Match platform enhanced efficiency, transparency, and liquidity for users and became the inspiration for Octaura.
This launch comes at a time of unexpected growth in the CLO and syndicated loan markets that have doubled in size in the past ten years to over $1 trillion and $1.4 trillion in outstanding notional, respectively.
The Octaura venue for loans will be unveiled first, with the CLO trading venue set to follow. The firm then aims to expand to other products existing within the credit market. Industry veteran Brian Bejile was appointed as the chief executive officer, having spent more than 18 years previously in Citi, rising the ladder to global head of CLO Issuer Management.
“The secondary markets for trading syndicated loans and CLOs have not significantly evolved since syndicated loans first started trading over thirty years ago. When we launched CLO eBidding on Citi Velocity, we saw a 50 percent jump in bid volume in the first week. With that, the idea for Octaura was born.”