December 2003
Borrowers beset by growing opacity
By Brian Mooyart
Primary markets have undergone several transformations in recent years: for example, the rise of the roadshow, electronic bidding, internet auctions and price guidance. The question that borrowers increasingly ask is whether the new tools have led to better terms for their funding. Has the new-issue market become more transparent and has that led to improved accuracy in pricing?
It is seductive for a borrower to see bids on his issue coming in on lead managers' screens. The price demand curve builds before his very eyes. But how real is it all?
The roadshow is surely one of the most direct points of contact a borrower can have with investors who tell the borrower whether they like the story and at what spread they will buy. But is this their best bid?
New tools may tempt the...
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