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DEBT TRANSFER PRICING  

Indicative Pricing Assessment

Careful analysis of how current new issues as well as secondary bond trading activity translate into presumed appetite for a bond issue for a given Issuer Credit Profile requires a professional understanding of investor preferences and psychology as how these change over time. Only specialists who have actively brought new issues to market over a broad range of market conditions can render informed opinions as to the likely pricing required to get an issue priced and sold.

Lack of directly comparable transactions is much more commonplace than most Issuers prefer, given their obvious desire to fund themselves as needed and not when a competitor in the same industry happens to be issuing public debt. Likewise, lower levels of secondary bond trading, resulting from increased bank regulatory costs in maintaining bond inventories, contributes to challenges faced in "price discovery”.

GCA's Indicative Pricing Assessments are backed up by thorough documentation showing comparable pricing data on both a primary issuance as well as secondary trading basis. GCA's report would typically include:

  • Public Comparables Analysis, referencing:
    • A combination of secondary and primary issuance spreads as provided by reputable 3rd party data sources (including Bloomberg and Bank of America Merrill Lynch's Global Bond Indices) as well as by GCA's proprietary bond database.
    • New issuance spreads and secondary trading levels for a basket of comparable issuers of same or similar ratings and maturities.
  • Private Market Comparables (if applicable), referencing:
    • New issuance spreads for a basket of comparable issuers in the US private placement market, having similar credit profiles, and issuing in the same maturities, and designated time frames.
  • Assessments of new issue premiums currently demanded by the public market and (if applicable) illiquidity premiums demanded by the private market.
  • Assessments as to the expected investor appetite for the Issuer, its industry and the desired amount and maturities in both public and (if applicable) private markets.
  • Structural, covenant and call features typical for identified markets based on completed comparable debt issues.
 
 
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