The bookrunner role is one of a coordinator – managing the bond issuance process and providing insight into those aspects that are market-facing. Banks typically engage with clients at an early stage to discuss their capital markets options and provide guidance on what the benefits/considerations are for each. They also offer views on other workstreams that potential issuers need to be aware of so they act as a source of information on multiple aspects of bond issuance. This avoids the need for companies to obtain high-level information by having to speak to different parties individually. It also allows banks to talk holistically about the entire process.
Clients are free to engage with a number of different banks; however, each institution would typically provide their own views separately. Discussions as a bookrunner group begin only once mandated by the company on a transaction.
Bookrunners work together (and alongside external counsel) to make sure all the documentation is in place. Other tasks include creating an investor presentation to summarise the company’s credit story as well as arranging marketing meetings for the company to talk to investors about their credit profile and the rationale for wanting to raise funds.
Collectively, bookrunners outline indicative pricing views based on market conditions at the time, provide feedback on how other transactions have been received by investors and what the key considerations are for the company when they are looking to announce a transaction themselves.
These topics include, but aren’t limited to, items such as:
Once the transaction has been announced in the public domain, bookrunners guide the company during the marketing phase and collect feedback from investors to determine the appropriate strategy for pricing.
On execution day, pricing details are released and bookrunners work with both the company and the investors to agree on a pricing level. Post pricing, bookrunners manage the settlement mechanics, making sure the bond proceeds flow to the company once investors have made their payments.
bookrunners are appointed to work alongside companies at all stages of the bond issuance process. They manage the different workstreams so that all aspects come together at the appropriate time and lead in the areas of pricing and execution. Bookrunners take on much of the heavy-lifting, allowing the company to focus on successfully outlining the investment considerations to investors.
Sunil Kainth, NatWest Markets
