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Overbond Academy Fixed Income Market

Bond Life Cycle - Primary Market

Investors provide capital to corporations and government in the primary market

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Primary Market

Corporate Bond Market

The corporate bond market is used by corporations and financial institutions to raise medium to long term debt financing. Funds can be raised in a variety of forms:
  • Domestic or international
  • Underwritten or agency transaction offered to the public market
  • Public placements (e.g. Medium Term Notes)
  • Private placements

Primary Bond Market

The primary market is the marketplace where corporations and governments offer their bonds to investors. New bond issues are underwritten by one or more lead managers and a syndicate of co-managers. The underwriting process involves the following:
Overbond Academy - Primary Bond Market

Standard Bond Offering Structure:

  • Fixed rate new issues are generally offered at:
    1. A fixed spread (in bps) over a government benchmark rate (e.g. 10Y UST + 50bps)
    2. A fixed price/yield (e.g. 8% yield)
  • Floating rate notes (“FRNs”) are offered at a spread over a short term floating rate index (e.g. 3M USD LIBOR)

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