Missed the bond? We’ve been expecting you…

Aug 01, 2011
<p>Highlights from DIRK&rsquo;s annual conference in Frankfurt</p>

At least one Englishman who attended the DIRK Conference, entitled ‘IR 2020 – Fresh ideas for the capital markets of tomorrow’, was full of praise. ‘The only downside was the standard of my German,’ he lamented.

That put him in the minority bracket of the 500-odd delegates, of course, and the availability of simultaneous translation in some sessions mitigated his problem. He was also impressed by the conference overall, not least by the keynote speaker, Kasper Rorsted, CEO of Henkel, whose speech got people thinking – and talking.

His theme was volatility and the need for people to stop expecting things to get back to what they now see as the stability of the pre-2008 world. Rorsted pointed out that it’s not going to happen; volatility is the new normal. While this may be a challenge – not least because of the speed of communications now required – it also presents lots of opportunities.

Stephan LowisAnother area presenting a challenge is bondholder IR, which is needed alongside the more traditional IR aimed at shareholders and stock analysts. DIRK launched a new white paper on this subject at the conference and a couple of sessions concentrated on this area specifically. One such session was called ‘Fixed income IR: the dark side of the moon?’ and involved Dr Heinrich Degenhart, a professor of finance from Leuphana Universität Lüneburg; Dr Olaf Streuer of HCI Capital; and Dr Stephan Lowis from RWE, who noted that non-deal IR for bonds is usually handled by companies’ finance, treasury and IR divisions, but IR should also be called in at deal time.

A concern was raised during the session about the danger of fixed income IR failing to impart the nature of the risk attached to bonds. One example was that of a football club promoting its bonds to fans, whose enthusiasm for the club might outweigh their ability or desire to get to grips with the possible downside, perhaps on the assumption that fixed income investments are safer than shares. This also throws up another difference between debt and equity IR: Lowis pointed out that if you can do equity IR, you can do bond IR – but that the reverse isn’t always true.

This article appeared in the August print edition of IR magazine.

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