No lockdown for bond debt!

In these uncertain times, it is better to be big and healthy...

While each day brings examples of SMEs struggling to obtain financing from their banks including with the guarantee measures provided by the French government, the Eurobond market is experiencing record issuance: more than 90 billion euros between March 20 and today. The 70 billion euros of September 2019, the latest record, is a small move...

However, nothing was less certain at the beginning of March. Fears of a liquidity crisis recalled the worst memories of September 2008 after the collapse of Lehman Brothers. Indeed, on March 11, Danone closed the market with a 0.8 billion euros 7-year issue, the last issue before the start of the lockdown. There was some doubt as to whether the market would reopen, even though the equity markets were suffering historic setbacks, what would happen to the debt markets?

However, the pandemic has not dried up liquidity, which is still very abundant, helped by willing governments and a cautious European Central Bank. After having settled in record time the technical workings of remote work, banks reopened their desks on April 20 with ENGIE's bond issue, 3 tranches for 2.5 billion euros, with an average maturity of 8 years. Nearly 4 times oversubscribed, this issue demonstrated, if it were necessary, that investors were indeed present.

Companies, anxious to preserve their liquidity, are seizing the window: Carrefour (1 billion euros), Air Liquide (1 billion euros), Saint Gobain (1.5 billion euros), ADP (2.5 billion euros), Orange (1.5 billion euros), LVMH (2 billion euros), Total (3 billion euros), Pernod-Ricard (1.5 billion euros), Bouygues (1 billion euros), Cap Gemini (3.5 billion euros), La Poste (1.8 billion euros), JC Decaux (1 billion euros), Sodexo (1.5 billion euros), Auchan (1 billion euros) for the most important French companies. A banker testifies: "I thought I was going to crack: 5am to midnight every day, sometimes up to 9 transmitters in the same day! ". The entry into the blackout period a few days ago has come at the right time to put a stop to the market frenzy.

Liquidity in times of crisis does, however, come at a price: spreads have tightened, often by 100/150 basis points on mid-swaps for the best-rated companies, up to more than 300 basis points for companies in troubled sectors or those hard hit by the impacts of COVID 19. A windfall effect for investors who seize this opportunity to earn a return on top-rated bonds; some issues have been oversubscribed up to 8 times, including on long maturities, often with 10- or 12-year tranches. However, risk aversion is still present: only investment grade companies are benefiting from this good performance of the bond market. The most fragile crossovers and high-yielders have to find other sources of financing.

To conclude, the health crisis is not the crisis of 2011. It has in no way led to a credit crisis. On the one hand, liquidity is assured within the banking system by the ECB's rapid and strong decisions. On the other hand, large companies are much more solid and have a cash cushion not comparable to 2011.

Investor confidence is therefore high in the flagships of our economy, while companies are showing anticipation and caution, suggesting a vigorous post-confinement recovery.

Data: value through exploitation

In the beginning, we traded metals, which had the value of money.
In the beginning, we exchanged information within the company.

And then one day we created the gold standard.

And then one day the information became data. The data!

In both cases, it is about awareness of value. Gold becomes valuable through its use in several areas: jewelry, technology, investors and central banking. Data is enhanced by the uses made of it by the various business lines of the company: improving decision-making, analyzing profitability, strengthening customer knowledge, improving services, etc. Data users are therefore the "creators of value ".

Before, the emphasis was on the "collector" of data. Companies tried to designate a "native" owner of the data, without very often succeeding in doing so ... This designation was intended to empower a reference profession in the definition and in the quality of the data. However, for customer data, the customer himself is the sole owner. It makes its data available to enable a company to serve purposes related to its activity. The company therefore sets the terms of data acquisition according to the use that will be made of it, a bit like the alloy or the carat of gold for a particular job.

Once collected / acquired, data has an “economic” value. It can serve other purposes: it is the pooling of data and therefore of value. This pooling invites organizations to break down the silos that still exist, within the authorized sharing limits (GDPR, confidentiality, conflict of interest, etc.). Pooling also makes it necessary to set up governance for the acquisition and use of data in order to integrate the constraints of all the referring businesses. Therefore, the strongest constraint will prevail: data collected daily can be used for monthly use.This pooling approach can be implemented for any new use. On the other hand, there is also the question of data already collected n times to meet n needs. There are then several possible sources for a data. The lack of rationalization of sources and therefore of data collection induces a significant cost for the company. Data acquisition is a significant part of the cost of an IT project. In addition, this does not promote quality since an action on one source will not necessarily be passed on to other sources. The single collection of data for shared use is a real vector of gains.

New technologies make it possible to capture and exploit data in the service of these ambitions. The subject of processing a large volume of data is now behind us with Big Data technologies and offers / solutions around data are multiplying (data virtualization, data quality, etc.). But before being charmed by these new possibilities, preliminary work around data (data!) Must make it possible to question the purposes of these new technologies upstream of investments and associated projects. A bit like gold: before buying the safe, you first counted the gold you have.

The heart of our mission is moving ...

The confinement immediately implied a reorganization of our missions, within our own teams and within our clients. The “move”, as we say today, was impressive. In two or three days, tele-work had definitely been defined as a rule over face-to-face. I take my hat off to all Akeance teams and our teams customers for such efficiency!

But what about our missions?

First of all, this reactivity made it possible to maintain all our missions. In fact, almost none of them stopped or was suspended. The tools (Skype, Teams and other Loopups) have a lot to do with it, but above all, everyone willingness to want to continue the activity of the projects is essential. No matter what, professional life continues. There are, however, three types of project.

Very structured, large-scale projects that are "on going" can hardly be put on hold. A sort of “ocean liner effect”. Of course, VPN connections are not always the only solution, but somehow these projects continue.

Other projects come to serve other teams. Within a corporate or an ETI, the teams dedicated to the functions currently known as “non-essential” should not feel neglected. It is important to view these teams with the same regard as any other team and to maintain certain projects with that in mind. This is how we have just sold our latest assignments, on behalf of so-called support functions within large groups. Professional solidarity for all the teams: this ranges from a choice of software package to improving control processes...

Finally, here and there we see peaks of activity or transfers of activity from one team to another among different clienteles. Cash flow forecasts immediately became under the high lights, for example. Likewise, “business” services such as associated back offices within banks are increasing in activity. Akeance offers its services for these recently expressed needs. Our experiences and expertise allow us to be immediately operational, even remotely. Some of our customers appreciate it.

But let's not forget the essential: take care of yourselfl!