Subject: Driving Direct CP Issuance
From: [email-masked]
Cc: [email-masked]
Date: Tue, 27 Nov 2001 09:38:05 -0800 (PST)

http://www.treasuryandrisk.com/issues/Nov01/01NOdriv.html

E-FINANCE

Driving Direct CP Issuance
New Product Lets Issuers Build Real-Time Market Picture

By Susan Kelly

Last December, Julie Nickoley, senior manager of commercial paper
operations at DaimlerChrysler, agreed to work with Prescient Markets to
develop a Web-based subscription technology service to help companies price
and manage their commercial paper issuance. The goal: a system to provide
real-time flow of short-term prices and a way to track investors and
competing issuers. At the time, the global automaker and long-time direct
CP issuer saw the possibilities as interesting, but not necessarily a
priority.

All that changed two months later, when DaimlerChrysler's CP was downgraded
to A2/P2. Suddenly, big money-market funds, which once constituted 85% of
DaimlerChrysler's market, were no longer buyers. Nickoley had an immediate
need to figure out what other buyers existed out in the market to take
their place, but it took her a day or two to get investor information out
of the mainframe-based system she used to manage CP issuance.

In October, the kind of capability Nickoley sought finally became available
with the introduction of Prescient Funding Desk.  Now we know for all
customers what time of day they trade, what size of trade they normally do,
if they come in through cpmarket or on the phone,  says Nickoley.  The
customer analytics was the key.

With the development of Funding Desk, companies can get information on
prices, including fluctuations in competitors? CP rates and what investors
are looking for in the market on a real-time basis. Funding Desk's pricing
module provides short-term market rates from Prebon Yamane and CP rates
from cpmarket.com, Prescient?s online platform for direct issuance of CP.

In Tune with Market
The advantages? Trades done on cpmarket.com flow automatically into Funding
Desk, and Prescient says it is working on a link with Bloomberg that will
bring in data on trades done on Bloomberg's CP platform. Companies can save
on funding costs by using the data to target less yield-sensitive
investors. They can also save money by knowing when competitors move rates
and then matching those moves. Using Funding Desk,  we're much more in tune
to whether pricing is changing in the market,  DaimlerChrysler's Nickoley
says. Besides cost savings, issuers may simply want to keep tabs on their
investors to ensure that no one investor holds too large a chunk, in order
to lessen the risk of having to scramble to find other buyers if a big
investor exits suddenly.

Targeting New Issuers
Laurent Paulhac, Prescient's president, won't give the price of Funding
Desk, but says it varies based on the size of a corporation's CP program.
So far only DaimlerChrysler and ChevronTexaco are using Funding Desk.
Paulhac defines the market for Funding Desk as the 500 U.S. companies with
more than $1 billion of CP outstanding. About 40 of those companies now
sell some or all of their CP directly. But given the ease of electronic
issuance and the support available on Funding Desk, Paulhac expects more
companies will move toward direct issuance via the Web. In fact, officials
at both Prescient and Bloomberg say they were already seeing more interest
in their platforms for direct issuance from companies that traditionally
placed their CP through dealers - even before Funding Desk's debut.

If those companies are going to sell paper directly, they're going to need
something on the funding desk or treasury operations side to account and
process and transact, says Craig Dukes, North American manager for
short-term funding at Ford Motor Credit. Funding Desk is a perfect fit for
those people.

Laurent Paulhac

Prescient Markets, Inc         914-989-3111  (W)
445 Hamilton Avenue          914-422-3693  (F)
White Plains, NY 10601      914-715-4060  (M)

Please visit us at http://www.cpmarket.com