For an investor to participate in a new issue, they typically provide an expression of interest following the marketing of the bond by the dealer and issuer. Alternatively, an investor could provide an expression of interest via reverse inquiry.
An expression of interest is an expression showing a conditional, non-binding interest in buying a new issue. Investors provide the issuer and dealers with pricing expectations, principal amount of the issuance they would look to purchase, and any specific conditions.
If an issuer plans to issue a bond in the debt capital markets, they will typically select a bank syndicate group to underwrite the bond and ensure the sale of the bond to investors goes smoothly from both an economic and operations perspective. The bank syndicate provides investors with market updates and changes in pricing/sizing expectations to make clear what the expected economics of the issue will be. The lead manager(s) also assist in drafting legal documentation, including the prospectus, which will ultimately be provided to investors in both preliminary and final form. In addition, investors, if not already a client of the underwriter, will be asked to provide settlement instructions for if the bond is issued.
On the bond pricing and issue date, the investor will be contacted by the bookrunners (usually in the morning) and will be allocated portions of the new issue based on a competitive bidding process and previously indicated interest. Once pricing and principal amount is determined by the bookrunners, the issuer and investors will join a final pricing call to establish the exact terms of the issuance.
Following pricing and allocation of a new issue, the offering document is signed and filed and the deal will close. Settlement agents will transfer the proceeds to the issuer and investors will receive the bonds. Typically, corporate bonds settle three days following the issue date. Following settlement, the bonds will be listed and can then be traded in the secondary market by investors.