When the book has been refined and closed, a decision is made to determine how much to give to each investor. At this meeting the banks compare information and eliminate duplications in orders - in other words, they refine the book. There may be investors who decide not to participate.įinally, there is a third call to complete the operation with the agreement from those involved, the issuer and banks. If there is a change in price, it is announced to the market. At that time the company can decide whether or not to adjust the price, based on the behavior of the market and investors. ![]() Now is the time when the issuance is announced to the market and the “book” is opened - a digital archive where the different orders from investors are noted.Īfter several hours, there is another call to see how the book is doing. If no significant changes have taken place in the market that could put the operation at risk, the bank advises the issuer on the price, they agree on the premium for the operation and coordinate a strategy. It’s the “go-no go” call - a key moment in which, based on the market conditions that day, it is confirmed whether to go ahead with the issuing or postpone it if the circumstances have greatly varied. ![]() When that day arrives, there is an initial call with the team that will carry out the transaction and the company itself first thing in the morning. What does it mean when we say a bank is the ‘bookrunner’ for a deal? Or if a financial institution has acted as the ‘lead manager’ or ‘lead arranger’? These are just some or the roles that banks can play in bond issuances and loan transactions. Once it has been decided that the bond will be issued because sufficient interest exists, the bank and the company look for a window of opportunity and establish a tentative date, which will greatly depend on the market conditions. Thus, the purpose of the roadshow is clear: to involve investors and gauge the price range and maturity. If the response is not positive, the operation is postponed. It is also key to find out what the market looks like and how much appetite there is for the company’s risk. This involves meetings with investors in the biggest financial hubs in Europe (Paris, London or Frankfurt) a presentation is given and any questions are addressed. ![]() What is known in the industry as a ‘ roadshow’ is organized. Presenting the operation to investors is a key point in the process for new issuers. 3.- Presentations to investors, the ‘roadshow’ It is a slow, tedious process, but support is provided by outside attorneys. This includes the contracts that establish the conditions for the issuer and the banks participating in the operation. ![]() The legal documentation is prepared in parallel in order to ensure that it is ready at the time of the operation. Throughout this process, the company is under the auspices of the bank that is advising and assisting it, starting from the preliminary meetings with the agencies - which they attend - to the actual preparation of the presentation to be given to the agencies. If it does not yet have one, the bank examines the company’s credit and, based on its sector, tells the company which rating agencies would be the most appropriate. In order to issue a bond on the market, it is recommended that the company have a rating from a rating agency. Rating analysis and documentation preparation The bank a nalyzes the company’s financial situation, determines whether a bond issue is appropriate and if the company meets the essential requirements for the market. First, the company talks to the bank and explains its need for financing.
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