Photo Tatiana Carruzzo © REYL
By Tatiana Carruzzo, Head of Asset Services Market Insight at REYL Intesa Sanpolo
Once reserved for a handful of large corporates, private bond issues are now taking on a growing role in financing Switzerland’s economic fabric. Driven by the combined pull of alternatives to traditional banking channels, increasingly sophisticated investors and a more demanding regulatory environment, this form of financing is gradually establishing itself as a fully fledged infrastructure – flexible, disintermediated and increasingly standardised.
Switzerland offers particularly fertile ground for this shift. By the end of 2024, private debt had reached 165% of GDP, compared with about 32% for public debt, illustrating the extensive use of financing outside the regulated market. In 2023, the Swiss stock exchange recorded 436 new bond issues, mostly in Swiss francs, for a total volume of CHF 116 billion in debt – the second consecutive year above the CHF 100 billion mark.
The regulatory environment is playing a catalytic role. With the finalisation of Basel III, undrawn credit lines – previously not very burdensome – are becoming more expensive for banks, which must now hold capital even against undrawn commitments. This is reducing their appetite for revolving credit facilities. In this context, issuers may turn to private markets to secure funding that is more durable and better tailored to their needs.
Private bond issuance offers valuable flexibility in this respect. The issuer can tailor maturity, payment frequency, currency or the form of return according to its constraints. It can also structure the bond into different tranches depending on the investor profiles targeted.
This freedom requires a robust operational infrastructure. The role of the paying agent therefore becomes strategic. Beyond simply distributing payments, it orchestrates the bond’s lifecycle, ensures contractual compliance, oversees calculation and distribution mechanisms, and acts as a neutral third party between the issuer and the holders.
The paying agent is an indispensable player in the bond ecosystem: it provides the operational link between the company issuing the bond and the central securities depository responsible for record-keeping and settlement. It ensures the smooth running, security and compliance of operations from the primary market all the way through to post-issuance cash flows.
This function is essential to building trust: the paying agent lends credibility to the transaction, encourages the participation of institutional investors, ensures traceability of cash flows and enables monitoring throughout the life of the product in line with regulatory standards.
In my view, the role of paying agent often remains underappreciated, even though it is absolutely central to the smooth execution of an issuance. It acts a bit like oil in the machinery: it ensures coordination among all service providers while leveraging its network on behalf of issuing companies. What makes this role particularly stimulating is the diversity of the projects supported – projects which, by their nature and purpose, reflect the richness of Switzerland’s economic fabric.
Securitisation consists in turning assets into tradable financial instruments on a private or regulated market. It makes it possible to structure a transaction legally and financially around a specific asset, by rendering it liquid and transferable.
Beyond the operational dimension, securitisation carries crucial legal and wealth-management value. It makes it possible to recognise and protect an asset. A non-listed shareholder in Switzerland is traditionally identified through an internal register, which is often of limited enforceability. But when an asset is integrated into a securitised structure – a bond linked to an economic right – it benefits from a documented and legally secure framework.
Securitisation also addresses the limits of tokenisation. While tokenisation promises traceability and accessibility, it still suffers from a fragmented regulatory framework and technical risks. Securitisation, by contrast, relies on recognised, transparent structures and provides legal certainty and protection of investors’ rights.
Private bond issuance is no longer a peripheral instrument. It is becoming a strategic lever, underpinned by specialised players, with the paying agent as one of its pillars.
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