medium · Debt Capital Markets primary-issuance-syndication

Why would an issuer ever choose a 'best-efforts' deal instead of a 'bought deal' if the latter provides more certainty?

1. A bought deal forces the issuer to share a slice of its future equity profits with the bank.
2. A best-efforts deal lets the issuer compel the bank to purchase any leftover unsold bonds at a later date.
3. Regulators permit the best-efforts format only for the most liquid, top-tier AAA-rated credits in the market.
4. The best-efforts format is typically cheaper in terms of fees because the bank is taking less risk.

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