Pricing by Negotiated Sale
In a negotiated sale, the issuer may select the underwriter at any time in the process prior to the public sale date, even before the bond issue has been structured. The issuer may rely on its own financial team to structure a proposal, or it may hire the underwriter to provide financial advice and actively participate in setting the bond’s parameters: call schedule, bond denomination, interest rates, spread, and protective covenants.
For a negotiated sale, an issuer will deliver a Request for Proposals to selected underwriters. The Request for Proposals will specify the services required and the selection criteria by which the issuer will evaluate the submitted responses.
The issuer may select co-managers from competing firms to work as part of a syndicate, with the lead underwriter coordinating their activities. Or it may leave the choice of a syndicate to the lead underwriter. Once the syndicate is selected, the process of structuring the bond issue and completing the other origination tasks are undertaken, mainly by the lead underwriter and the issuer. The syndicate w