CFA Level 1 - Issuing Bonds

II. Issuing Bonds

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:

Competitive bids
Negotiated sales.
Private placements.

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.

Next: CFA Level 1 - Types of Markets

Table of Contents

1) CFA Level 1 - Chapter 12: Securities Markets

2) CFA Level 1 - Issuing Bonds

3) CFA Level 1 - Types of Markets

4) CFA Level 1 - Exchange Market Structure

5) CFA Level 1 - Exchange Market Characteristics

6) CFA Level 1 - Short Selling

7) CFA Level 1 - Buying on Margin and Maintenance Margin

8) CFA Level 1 - Effects of the Institutionalization of capital markets

9) CFA Level 1 - Characteristics of Security Indexes

10) CFA Level 1 - Computing Indexes

11) CFA Level 1 - Domestic vs. Global Indexes

12) CFA Level 1 - The Efficient Market Hypothesis

13) CFA Level 1 - Weak, Semi-Strong and Strong EMH

14) CFA Level 1 - Market Anomalies

15) CFA Level 1 - Implications of Efficient Markets