Modernizing municipal bonds with BondLink

We might not see the built environment around us as debt at first glance—but 75% of the hard infrastructure we use on a daily basis is funded by the municipal bond market. From roads to schools to hospitals, municipal bonds help sustain local communities. Despite its massive size, a $4 trillion market in the US involving 90,000 local governments, the municipal bond space still largely lacks technologies that can make for smoother and more cost-effective bond issuance processes. 

To Colin MacNaught, CEO and Co-Founder of BondLink, the sector’s keystone but underappreciated role in US economy and society are what make it an exciting space to help modernize. As a software solution connecting municipal bond issuers with investors, BondLink faces unique sales challenges, especially given its role in building both the supply and demand sides of a market. 

What

BondLink provides software solutions for the government side of the municipal bond market. It has built first-of-its-kind tools for public sector CFOs to make better decisions around their capital programs, including the kinds of projects to fund, the means to fund them, as well as how to structure new bonds. BondLink also helps automate go-to-market processes by offering documentation prep tools, investor roadshow recording products, as well as digital channels for broadcasting investor opportunities to local and retail investors. 

Why

“We're trying to help [bond issuers] price more efficiently and reach more investors,” MacNaught said. “If we can help them save a basis point or a couple basis points on a bond sale, that allows them to devote more public funds to other critical public goods like welfare and health care and public safety and public education.” 

How

“The good part about offering software in the public sector is that everything is public,” MacNaught said. “There’s a lot of good information that we can bring to bear as part of our business development efforts and funding.” Through access to public information, BondLink can identify the CFOs of different public authorities, ascertain their contact details, and determine the size and timing of the authority’s next bond issuance. 

While the bond market is massive and omnipresent, the marketplaces themselves are largely local. Most bonds are purchased by individual investors or institutional investors on behalf of retail, and they’re mostly untouched after purchase. BondLink needs both sides of a market to convene around its tools in order to succeed, though it builds the demand side of the market by providing local governments with the tools to generate investor demand. 

“We… make it easy for [governments] to alert their constituents that there's a bond sale coming in, to give them guidance as to how to participate, how to look at the bond sale, and, if they're interested, how to place an order for a bond,” MacNaught said. Crucially, BondLink is free to investors. Without BondLink, bond sales largely occur without a means for the general public to be aware of a bond sale, which offers an informational advantage to institutional investors. 

While some local authorities were content with the status quo while capital was cheap, rising interest rates have provided further fuel for BondLink’s growth. Since infrastructure projects can’t be put on hold, bond issuers now have additional motivation to find new investors and tap into local pools of capital at beneficial rates. “The big untapped pool of capital out there for almost every government issuer are the local investors right in their backyard,” MacNaught concluded.