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How to Issue Corporate Bonds: 7 Steps
USINFO | 2014-01-03 09:44
Decide if issuing a corporate bond is the right choice for your business.
●Conduct a review of your company's financials to uncover areas where you can save money or redirect funds. If you determine that outside funding is necessary, consider selling stock or acquiring a loan. However, a benefit to issuing corporate bonds is that you are not selling equity in your company or taking out another bank loan.
Select an underwriter.
●The underwriter is an investment bank and may also be called the Lead Manager.
●The underwriting firm works with your company (the issuer) to begin the process of issuing corporate bonds by determining the specifics of the bond, including when the bonds will mature, the interest rate offered, and the price of the bonds. Both the issuer and the underwriting firm will be represented by counsel.
Invite additional underwriters to be involved in the deal.
●The Lead Manager will invite other investment firms to join the deal.Those who accept the invitation create what is called an underwriting syndicate. Your project is deemed officially "launched" once the syndicate has been formed.
Write and submit the registration statement to the SEC.
●The U.S. Securities and Exchange Commission (SEC) requires that corporations who desire to issue corporate bonds submit a registration statement with a prospectus that will outline the price of the bonds as well as what the company will do with the funds they plan to raise with the issue of corporate bonds.
●All of the participants in the deal, including the issuer, Lead Manager, and the members of the underwriting syndicate, work collectively on the language and format of the registration statement.
Price the bonds.
●Set the final price of the issue after you've sent the registration letter and taken preliminary orders for the bonds. Submit the final pricing to the Trade Reporting and Compliance Engine (TRACE) which is a part of the National Association of Securities Dealers.
Market the bonds.
●The Lead Manger will complete a questionnaire from the Depository Trust and Clearing Corporation (DTCC) which will allow you to be eligible for the bonds services that DTCC provides, such as distribution and depository. Once your issue has been approved, you can commence marketing and taking orders for your bonds.
Deposit bonds and distribute funds.
●After you have issued your corporate bonds and deposited them with DTCC, the Lead Manager handles the distribution of the bonds to the underwriting syndicates who in turn issue the bonds to investors. After the bonds have sold, the Lead Manager is responsible for distributing the funds to the issuer.
●Conduct a review of your company's financials to uncover areas where you can save money or redirect funds. If you determine that outside funding is necessary, consider selling stock or acquiring a loan. However, a benefit to issuing corporate bonds is that you are not selling equity in your company or taking out another bank loan.
Select an underwriter.
●The underwriter is an investment bank and may also be called the Lead Manager.
●The underwriting firm works with your company (the issuer) to begin the process of issuing corporate bonds by determining the specifics of the bond, including when the bonds will mature, the interest rate offered, and the price of the bonds. Both the issuer and the underwriting firm will be represented by counsel.
Invite additional underwriters to be involved in the deal.
●The Lead Manager will invite other investment firms to join the deal.Those who accept the invitation create what is called an underwriting syndicate. Your project is deemed officially "launched" once the syndicate has been formed.
Write and submit the registration statement to the SEC.
●The U.S. Securities and Exchange Commission (SEC) requires that corporations who desire to issue corporate bonds submit a registration statement with a prospectus that will outline the price of the bonds as well as what the company will do with the funds they plan to raise with the issue of corporate bonds.
●All of the participants in the deal, including the issuer, Lead Manager, and the members of the underwriting syndicate, work collectively on the language and format of the registration statement.
Price the bonds.
●Set the final price of the issue after you've sent the registration letter and taken preliminary orders for the bonds. Submit the final pricing to the Trade Reporting and Compliance Engine (TRACE) which is a part of the National Association of Securities Dealers.
Market the bonds.
●The Lead Manger will complete a questionnaire from the Depository Trust and Clearing Corporation (DTCC) which will allow you to be eligible for the bonds services that DTCC provides, such as distribution and depository. Once your issue has been approved, you can commence marketing and taking orders for your bonds.
Deposit bonds and distribute funds.
●After you have issued your corporate bonds and deposited them with DTCC, the Lead Manager handles the distribution of the bonds to the underwriting syndicates who in turn issue the bonds to investors. After the bonds have sold, the Lead Manager is responsible for distributing the funds to the issuer.
