Markets

EIX runs two different types of periodic auction on its trading platform. Both auctions usually run for a period of four days with the matching engine executing on a Friday afternoon. Primary Market and Secondary Market auctions are run on alternate weeks.

Primary Market

Primary Market auctions are held to raise debt for estates and infrastructure projects. Projects may either involve construction or the refinancing of existing operations and must seek to raise a minimum of £20mn of debt.

During Primary Market auctions, Members enter bids to buy tranches of newly issued Project Bonds. At the end of the Auction, bids received above the floor price (usually set at par) are run through the matching engine. Winning bids are awarded on the basis of best price and time stamp.

All Project Bonds accepted onto the EIX Primary Market:

  • Include standardised terms and conditions, structure and offering documents as set out in the Disclosure Rules. This is to ensure consistent structuring of Project Bonds and the inclusion of key risk clauses
  • Have been structured and arranged by an approved EIX Pilot. EIX Pilots are FCA regulated advisory firms with experience in structuring and raising infrastructure debt
  • Have passed independent technical due diligence checks undertaken by global consultancies and engineering firms
  • Are drafted in English law and give the courts of England and Wales exclusive jurisdiction to settle any dispute or claim

A comprehensive pre-auction roadshow process runs for six weeks before each Primary Market Auction. This allows Primary Market Members to undertake due diligence on the project, bond documents and underlying financials as well as to meet the Project Sponsor principals, technical due diligence providers, drafting lawyers and project Pilot. 

Secondary Market

Secondary Market auctions are held to enable Members to sell-down and buy into existing Project Bonds. The Secondary Market includes Project Bonds that were fundraised on the Primary Market as well as pre-existing bonds that are listed on the Secondary Market in order to trade.

During the auction, offers to sell tranches in Project Bonds at or above a minimum price and bids to buy at or below a maximum price are captured in the Order Book.  EIX uses Limit Orders.  The auction platform then determines a single ‘uncrossing’ price which maximises the amount of business which can be executed at the same uncrossing price.