XBRL mandated in the US – we finally got there

Replacing a voluntary filing programme that found relatively few participants, the Securities and Exchange Commission has proposed a rule that would require all public companies to submit reports in XBRL by 2011.

XBRL – promoted by the SEC under the name interactive data - lets standardised accounting data be tagged and retrieved more easily. They can be read by software, screened for specific data, and reorganised. In theory, buy and sell side will be able to create and update their models automatically when they've been tagged using XBRL.

And potentially XBRL could be translated into terms used by different countries' accounting systems, enabling a true like for like comparison between international companies.

Back in the 1980’s – showing my age again – I worked with others on the “Extel card”. This was a printed format that captured the (pre IFRS) financials from mainly UK and European companies. However, the data always suffered from the lack of comparability. Analysts who wanted to compare peer companies across borders had to construct their own models and restate the financials of each company to be compared.

When the Extel card became computer readable, the search was on for ways of doing this global comparison automatically. Names like Global Vantage and Worldscope reflect that era. None however worked effectively, still requiring manual intervention.

This weeks announcement, taken together with the completed IFRS and US GAAP taxonomies (dictionaries) and the growing mandatory use of XBRL in Europe – notably EXCLUDING so far the UK - moves the automated ‘global comparison’ vision a stage nearer.

The changing fortunes and business model of investment banks have led to a reduction in numbers of companies followed. At the same time, to judge by the attendance on the IR courses and seminars that I run, growing numbers of emerging markets companies seeking international capital, and hence needing analyst coverage. XBRL efficiencies should provide that coverage.

This might just be the start of a new era.

Time to dust off the IR debt strategy?

Corporate bonds are going through something of a revival at the moment.

Prior to the credit crunch, UK corporate bonds had looked unappealing. Interest rates were rising, making cash a more attractive proposition, while spreads were exceptionally tight. Investors were not receiving a premium for the extra risk inherent in even the highest quality corporate bonds.

With the collapse of cheap credit, banks and hedge funds raised funds by selling their corporate bonds, often at low prices. However this sell off seems to have stopped and new corporate bonds are coming to the market - notably this week's record $9bn issue from GSK - and although they are issued on wide spreads, those spreads are tightening, reflecting a return of buyers.

As a consequence asset allocation at a growing number of fund managers is growing on the debt side.

Meanwhile, as discussed in the blog earlier, ratings agencies have been under pressure to reveal more about their rating methodologies, and to abandon the alphabet-based rating scale for complex structured finance instruments.

While this debate is on, the demand for corporate debt is likely to continue to grow.

So what does debt IR look like? As so often it varies widely. A few issuers have specialist debt IR programmes, with debt roadshows, dedicated debt sections of their websites, and a range of debt profiled financial reporting.

Others – by observation – simply pass any enquiries from debt investors to Treasury.

However, with the success of the largest corporate debt issue, issuers with strong cash generation potential, and seeking to bolster lower valuations through share buy backs, will look at new debt issuance. And preparation in the form of a good debt IR outreach will be useful.

And now UK regulators consider short selling disclosures

More welcome news for iR professionals who have long complained about the imbalance between disclosures of corporate information useful to investors, and those disclosures required of investors themselves. The FSA appears ready to require disclosure of short positions.

In recent weeks we have seen a steady series of announcements about disclosures in the investment tools used especially by alternative investors.

The SEC is beefing up Regulation SHO on naked short selling. The Australian Securities Exchange has consulted on the disclosures required on stock lending, as a proxy for short selling. The UK’s Financial Services Authority is pondering – post its consultation earlier this year - what to do about disclosures by holders of Contracts for Difference, as indeed are the Australians – following their PM’s visit to London.

And yesterday Mr. Hector Sants, head of the Financial Services Authority, was reported in the FT as saying that statutory disclosure of short positions was a "reasonable proposition", although the body had no plans to take action yet.

As we bask in today’s London early summer sunshine, it is tempting talk about the single swallow not making a summer, but in the matter of widening disclosure of holdings – and voting positions - it does look as if an entire flock of swallows has been seen.