medium · Debt Capital Markets rates-macro-drivers
In a 'best-efforts' syndication, what is the risk to the investment bank?
- Mark-to-market losses on warehoused bond inventory should benchmark interest rates rise.
- Regulatory fines for failing to satisfy the issuer's stated funding requirements.
- Reputational damage and the loss of potential fees if the deal fails to clear.
- The bank must purchase every unsold bond at the agreed reoffer price.
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