How Do Investment Banks Issue Bonds?
In the new issuance of bonds, an investment bank has options with respect to how to place the bonds in the market. These options are as follows:
1. Competitive Bids
Competitive bids are the process in which the bond issuer solicits bids from the underwriting of various investment banks. This is typically used in dealing with municipal bonds.
2. Negotiated Sales
A negotiated sale is the process whereby a bond issuer negotiates with the investment bank with respect to the pricing of underwriting services.
3. Private Placements
A private placement is the process whereby an investment bank "places" the new bond issue with a small number of buyers, typically large institutions. Private placements are not registered with the SEC for public sale.
Types of Markets
MarketsTreasuries are considered the safest investments, but they should still be analyzed when issued.
MarketsUnderstand the basics of corporate bonds to increase your chances of positive returns.
Managing WealthDiscover five reasons why investing in municipal bonds after the Fed hikes interest rates, and not before, can be a great way to boost investment income.
MarketsInvesting in these bonds may offer a tax-free income stream but they are not without risks.
Personal FinanceBond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
ETFs & Mutual FundsMunicipal bonds and bond funds differ in several ways, which is partly why they complement each other well.
Personal FinanceLearn to distinguish between general obligation and revenue bonds to ace this test.
Financial AdvisorMost of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
Managing WealthBonds play an important part in your portfolio as you age; learning about them makes good financial sense.
InvestingThere aren't many other sources right now for relatively safe, steady income.