easy · 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 requires the issuer to share its future equity profits with the bank.
2. A best-efforts deal allows the issuer to force the bank to buy any unsold bonds later.
3. Best-efforts deals are only allowed for the most liquid AAA credits.
4. The best-efforts format is typically cheaper in terms of fees because the bank is taking less risk.

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