The rush to move the secondary market online has created a growth in the number of Web sites available in the past few weeks in which issuers can sell their bonds. One specializing in the sale of agency debt was launched without a hitch early last week.
MuniAuction, a Pittsburgh-based fixed-income securities company specializing in municipal debt auctions, has expanded with the creation of AgencyAuction. Freddie Mac and the Federal Home Loan Banks were the first agencies to use AgencyAuction's platform for the sale of their discount notes.
"They use a competitive sale format, just like the municipal bond market does," said Myles Harrington, president of MuniAuction. "That was the reason why we were fairly successful in getting the contracts with these two agencies. We've had prior experience not just in competitive fixed-income sale, but also we had success developing and maintaining a platform for doing such things with a two year history by the time they got around to doing it." MuniAuction has been hosting auctions since February 1997.
Sara Drake, a member of the FHLB Office of Finance, said that $2.4 billion of debt was sold in the Jan. 11 auction, with subsequent auctions occurring every Tuesday and Thursday. "I don't think there was even the smallest of problems on Tuesday. It went very, very smoothly," she said.
No stranger to online auctions, Freddie Mac, who sold $6 billion of debt over the Internet last week (MBSL 1/10/00), sold a total of $11.5 billion of one-, two-, and three-month reference bills over a two-day period, Jan. 10-11.
Jon Prince, Freddie Mac's director of debt marketing, was very pleased with MuniAuction. "They have a solid track record and are very experienced in fixed-income auctioning," he said. "They were willing to work with us right through the turn of the century. We inspected their premises. We're satisfied that they offer a very controlled environment."
AgencyAuction was officially launched with Freddie Mac's Monday auction, but has been working with the agency for about 45 days. The company is providing Freddie Mac with a full platform for its auctions, while the FHLB, who has been working with AgencyAuction for the past nine months, will provide its own back-end. AgencyAuction will provide the front-end.
Harrington noted that he hoped more government agencies will begin to use AgencyAuction in the future, and hinted at plans of expanding into other fixed income markets in the future. "I would say it's imminent," he said.