September 26, 2023 - Lenders and their service providers are trying to improve the accuracy, timeliness, and completeness of data to assist in decision-making and analytical processing. Traditionally, it has been hard to verify information relating to outstanding positions, undrawn commitments, contract level details, interest/principal and fee accruals, and transaction histories. However, today, when agents transmit their data in real-time to a centralized platform – largely Versana – it is possible for lenders and their service providers to receive this level of detail.
An important first step in data management is to source the data – that is collect it from wherever it resides and integrate it into the destination. Easier said than done! Loan data must be extracted from agency systems, consumed by Versana, and further transformed into a format (to include identifiers) that the many downstream systems of the lenders and their service providers can consume either directly or through middleware. This capability will exponentially improve data accuracy and workflow, decrease time expended reconciling cash movement and positions, reduce month- and quarter-end settlement freezes, and help to verify loan positions for traders in real time.
What is required in order to transmit data from system to system?
Strategic components to optimize system interoperability across the loan ecosystem enabling data transmission and consumption are (1) that parties, deals, and facilities are uniquely identified and (2) that all loan systems utilize the same set of unique identifiers. Therefore, CUSIP Global Services (CGS) launched a unique open-source entity identifier created specifically for the $5 trillion syndicated loan market (and the private credit space), available to all market participants, including vendors, without restriction. The CUSIP Entity Identifier (CEI), a unique 10-character code assigned to each legal entity, including banks, buy-side institutions, custodians, trustees, and corporate borrowers, was developed in collaboration with the LSTA and Versana.
CEI Issuance Methodology:
Each legal entity will have one CEI per jurisdiction; however, multi-managed funds will have a unique CEI issued based on each fund/fund manager relationship. The fund manager is responsible for the application and maintenance of the CEIs, which can be done by maintaining a valid tax form on the portal. For more information regarding entities that are eligible to receive CEIs and how CEIs are issued, retained, and terminated in connection with corporate actions, please refer to the CEI User Guide which can be found on www.lsta.org or www.CUSIP.com. To apply for a CEI, log onto https://www.cusip.com/apply/index/html and refer to CUSIP Entity Identifier CEI Request. CEI registrants (banks, fund managers, insurance companies, etc.) must submit a One-Time Onboarding form, creating a profile with CUSIP. After that, it can request CEIs for its branches, funds, trusts, etc., by completing the request form and submitting source documentation, e.g., tax forms. A registrant may request up to 1,000 CEIs in a single instance of request submission by selecting “bulk registration”.
Loan CUSIPs, long-standing facility identifiers, will now be more broadly used and adopted. Therefore, it is very important that CUSIPs are populated in all market participants’ systems. Agents should publish and maintain current deal and facility CUSIPs and respective data in the CUSIP portal to reflect:
- A change in a Commitment, including any increase or decrease through amendment or accordion.
- When a facility maturity date is extended.
- The addition of a new facility to an existing deal. (Pro tip: Retain CUSIPs with respect to an original facility (when consent is not received for it to be amended) and apply for a new CUSIP when the lenders consent to create a new facility for the portion of additional debt with a different pricing and/or extended maturity date.)
- The termination of an existing facility in an active deal; (Pro tip: Terminate the corresponding facility CUSIP.)
- The termination of an existing deal. (Pro tip: Terminate the deal CUSIP and associated facility CUSIPs.)
- The Credit Agreement is amended. (Pro tip: Reflect the Credit Agreement Amendment Date.)
- A change in the name of the Borrower.
- The transfer of a deal to a new agent, (Pro tip: Transfer ownership of the respective CUSIPs to the new agent.)
What are the Next Steps?
As Versana facilitates the wide distribution and use of both CEIs and CUSIPs by ingesting and publishing them via its real-time digital data platform, please:
- Apply for and populate CEIs in all systems to enable the adoption of streamlined digital workflows and facilitate the permissioning and sharing of information across the loan ecosystem.
- Ensure each facility is identified with a CUSIP in all loan systems.
- And agents: Please (please!) maintain clean data in the CUSIP portal and publish all CUSIPs.
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