Hope, fear and wonder as a new market opens
Credit bash crowds out Crillon
Use your debt lest someone else does
Debates on how to wring the best efforts out of bond-syndicate members are of long standing. But the debate has intensified as the US, Euro and global bond markets struggled to cope with market meltdown and then with the dramatic growth of corporate bond issues in Europe, which required lead managers to pre-market credit stories to potential investors, often for the first time.
In recent months, the pot method of setting aside part of an issue to be allocated to investors brought into a central order book by any and all members of a syndicate has cropped up more often in Euro and global deals. It is long established in the US primary market. Under the pot system, all syndicate members can contribute orders to the pot, which is ultimately controlled by the one or two banks leading the deal. The lead banks have discretion over how many bonds are allocated to which investors and should pass this information on to all syndicate members, so that they all know where bonds have been placed and have an equal chance of trading these in the secondary market.