CUSIP Global Services is leveraging its history of servicing syndicated loans, asset-backed securities, options, derivatives and other complex asset classes as it expands into the growing private credit and alternatives space.
The Norwalk, Connecticut-headquartered provider of issuer and asset identifiers is working closely with financial digital platform FactSet, the Loan Syndication and Trading Association (LSTA) and others to access data on business development companies (BDCs), investment vehicles that aggregate private credit deals to provide capital to small and mid-sized US companies. The information is being tied into CUSIPs, the nine-digit alphanumeric codes that CGS assigns to financial instruments to identify their issuer and other information.
CGS issued the first CUSIP for a syndicated loan in 2002. Through a long-standing partnership with the LSTA, it has since issued more than 50,000 syndicated bank loan CUSIPs.
Despite this longstanding presence in the space, the CGS recognises the need to remain closely associated with servicing private markets as buzzy newcomers have emerged to meet surging investor demand for transparency into the opaque markets.
Managing director, global head Scott Preiss, believes that CGS’ slate of evolving innovations will reinforce the organisation’s credentials as a long-time trusted vendor.
“Private markets aren’t new for us,” Preiss told Data Management Insight. “The data operations team at CUSIP is flooded every day with new instruments coming to market, both in the public and the private sectors, so it has been a natural progression for us to expand into private credit. The private credit category is getting a lot of buzz right now, but the underlying assets are incredibly familiar to us, and there is a great deal of overlap with more traditional asset classes, when it comes to underlying identity resolution.”
Data Link
CGS, which is managed for the American Bankers Association by FactSet, has been issuing CUSIPs for almost six decades. They are widely used in public markets in the US and about 30 other countries, where investors rely on them to provide views of their portfolios and to streamline trading, settlement, clearance and reconciliation.
By linking data to private-market CUSIPs, CGS provides transparency into a traditionally opaque part of the financial sector that attracts a third of all institutional investment.
Its core service includes private CUSIP identifiers and data from more than 1,100 BDC filings and more than 12,000 underlying instruments. This is expected to grow to 15,000-20,000 CUSIPs by the second-half of this year.
“We’ve received those filings via an API,” said Preiss. “Our team investigates and validates the data points that are required to guarantee uniqueness. And then we end up generating CUSIPs and standardising some of the associated data on those private credit CUSIPs.”
New Vendors
Global private credit markets are an emerging focus of investors, with Morgan Stanley predicting that US$2.6 trillion will be allocated to them by 2029. Naturally it follows that data and technology vendors are looking at ways to make the investment experience easier. Bloomberg recently launched an index that enables the tracking and benchmarking of BDCs. Private market data specialist Alkymi recently unveiled a tool to extract information from documentation associated with the market.
Another focus of growth is CGS’ existing association with the National Association of Insurance Commissioners (NAIC), through which it issues standardised identifiers for private placements, in which insurance companies invest. While these funding vehicles happen away from public markets, they require large volumes of administration, which can suffer for an absence of easy identification and data mapping.
CGS has created more than 180,000 Private Placement Numbers to streamline and bring transparency to the market.
This is another of the organisation’s long-standing involvements in the private space for which it receives little recognition.
It’s “an already robust existing private market where we’ve partnered and added value for many years,” Preiss said.
Token of Trust
Looking further ahead, the organisation is closely following developments in the tokenisation discussion and sees the need for a standardised identification system to ensure tokens and their underlying asset are inextricably linked and that data is effectively mapped to each.
CGS’ ambitions in the alternative markets space were tempered when JP Morgan abandoned Aumni, a provider of fundamental data on the companies of interest to venture capital firms, funds and law firms. CGS had partnered with Aumni to create a set of its CUSIP identification codes for investors and other market participants.
Preiss lamented the loss of a “good partner” but stressed that absence of Aumni from its suite of services hadn’t set back CGS’ private markets provisions or its ambitions.
“JP Morgan made the business decision to close down Aumni’s function and from our perspective, that was unfortunate,” he said, adding that he didn’t think JP Morgan’s decision was based on weakness in Aumni’s data.
“But we’ve seemingly never been more popular in private markets. We’re being approached day after day by potential partners, data providers, others with unique access to information in the private markets.”
Innovation Pipeline
Preiss said that even without Aumni it can provide clients with information on 1,100 private companies with 8,000 underlying CUSIPS. He also anticipates making announcements on new partnerships in the venture capital and private equity data sectors in the coming months.
In the meantime, CGS has launched a direct request template on its CUSIP.com website where market participants can ask for data sets.
Preiss says that CGS’ overall mission to bring order to markets through identifiers and standards remains unchanged, particularly as committed member – and a co-founder – of the Association of National Numbering Agencies (ANNA).
“We are extremely committed to pushing forward that work,” he said. “Standardisation is front and centre of everything we do in the US and globally.”
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