Article: A bought deal is one where the underwriter purchases a number of shares from the bond issuance in order to resell them itself. The issuer agrees on a maturity and yield for these bonds that is then locked in by the underwriter. The underwriter can then turn around and resell these bonds to syndicate members, institutional investors, and the public for a profit (the underwriting spread). The remainder of the bonds not sold to institutional investors or syndicate members will be sold to the public. Publicly-issued bonds can be issued in capital markets or banking markets, or both. Work with the underwriter or underwriting syndicate to determine the best market for your bonds based on the nature of your issuance. The maturity (or maturities), interest rates, and price of the bond will be officially set before the bond are sold. These prices only refer to the sale in the primary market, which is the first time that the bonds are sold. Afterwards, bonds traded from the original originals will be traded in the secondary market and may change prices. However, the issuer will only receive proceeds from the sale of the bonds in the primary market. The Lead Manager will complete a questionnaire from the Depository Trust and Clearing Corporation (DTC) which will allow you to be eligible for the bonds services that DTC provides, such as distribution and depository. Once your issue has been approved, you can commence marketing and taking orders for your bonds. Bonds may be marketed to investors through the underwriters' personal connections or through financial publications like the Wall Street Journal or Barron's. After you have received payment for the bonds, created your corporate bonds, and deposited them with DTC, the lead underwriter handles the distribution of the bonds to the underwriting syndicates who in turn issue the bonds to investors. This allocation is sometimes referred to as syndication. After the bonds have sold, the lead underwriter is responsible for distributing the funds to the issuer. The issuer can then use these funds to begin or continue whatever project or capital purchases the bonds were originally intended to finance.
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Negotiate a bought deal. Locate the right market for the bonds. Finalize bond terms. Market the bonds. Allocate bonds to purchasers. Distribute funds.