A corporate issuer has four routes to market. They differ in one thing above all: who carries the risk that the deal does not clear.
How can a company sell bonds?
In an underwritten, or firm-commitment, offering the syndicate buys the whole issue from the issuer at an agreed price and resells it. The issuer's proceeds are certain the moment the deal prices; the banks own the inventory risk. This is the standard route for a large investment-grade issue, and the fee is the price of that certainty.
In a best-efforts or agented offering the bank agrees only to try. It markets the issue and takes a fee on what it places, and the issuer wears the risk of an undersubscribed deal. Smaller issuers and less certain markets get this deal.
A private placement sells directly to a small number of institutions without a public offering. In the United States this runs under the private-placement exemptions, with resale to qualified institutional buyers under Rule 144A being the workhorse for the international market. In India, private placement is the dominant route for corporate debt by value rather than the exception. Listed private placements above a size threshold must be bid through an electronic book provider platform run by an exchange, which imposes an auction-like discipline on what used to be a set of phone calls (check the current threshold and platform rules with SEBI).
Shelf registration is a timing device rather than a distribution route. An issuer registers a programme once and then draws down tranches over the following period as markets allow, which turns a six-week process into a two-day one and lets an issuer hit a window. The United States allows this under the shelf rule, with the largest and most seasoned issuers getting a shelf that becomes effective automatically on filing. India has a shelf prospectus mechanism for public issues of debt securities and a shelf placement route for private ones (check the current SEBI requirements).
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How does a book-built bond deal work?
The mechanics of a book-built deal are worth carrying because they explain the numbers you will read in a syndicate report. The syndicate opens with price talk, a spread area rather than a number. Orders come in with limits. The book builds, and if it is heavily oversubscribed the spread is tightened toward the issuer, sometimes several times in a morning. Final allocation is discretionary, not pro rata, and the difference between the initial talk and the final spread is the new-issue concession in reverse. A deal that prices 5 basis points wide of the issuer's existing curve has paid a concession to get done; a deal that prices through its own curve has taken something from investors and will often trade badly in the aftermarket.
What disclosure does a bond issue need?
Every issue also carries a mandatory-disclosure apparatus that shapes what you can analyse. In India a public issue of debt securities requires a credit rating and a debenture trustee, and the trustee is the party that acts on a covenant breach on behalf of a dispersed set of holders. In the United States the indenture trustee plays the same role, and the offering document carries the risk factors, the use of proceeds and the description of notes that contains every term the contingency provisions page asked you to extract.
Read the description of notes first. It is the only part written to be enforced.