[ARTICLE] Bond Buyer Discusses Need for Obligor & Sector Classification
Bond Buyer's Sarah Wynn recently spoke to DPC DATA's Triet Nguyen about the pandemic and the long-standing problems investors face when comparing securities and tracking down their revenue sources.
During the pandemic, investors more than ever want to know what their credit exposure is in their portfolios.
According to the article, the problems stem from the fact that there is no single source of data, public or private, that correctly links bond issues to the correct obligors based solely on the security pledge at the individual CUSIP level. There is also not a consistent, uniform methodology to classify issues into relevant sectors. Consequently, municipal market participants have a harder time determining their risk exposure without knowing through which revenue source a government’s issue is being paid.
The municipal industry has been a notorious laggard when it comes to the adoption of technological innovations. As a result, “it’s been hard for market participants to determine what the credit risk exposure is in their portfolios,” said Triet. “…the current pandemic environment offers a unique opportunity to address a gaping hole in our reference data set. The uncertain fiscal environment facing most state and local issuers calls for increased credit vigilance on the part of all market participants, from the institutional investor to the individual financial advisor.”
New DPC DATA offering
The article noted DPC DATA is rolling out a new obligor and sector classification database which would allow investors and analysts to accurately identify and aggregate their credit risk exposure. It would be a paid service and available initially as a data feed that can be imported into existing portfolio management and credit research systems. Later, the goal is to build out a user interface.
To learn more about DPC DATA’s obligor and sector classification system for Municipals contact your DPC DATA representative or email Sales@DPCDATA.com.
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