A Eurobond issue~ is arranged as follows:
The borrower will appoint a bank to manage the bond issue. This managing Bank will probably be a .merchant bank or an investment bank. This managing bank invites one or more other banks or financial institutions to co- manage the issue.
• The managing banks try to ensure the success of the bond issue by inviting a group of banks and other financial institutions to underwrite the issue.
• Once the issue is underwritten, the managing banks will try to place the issue with a number of selling banks and other financial institutions.
• The selling banks will in turn try to place all or some of their allotment with clients. The ‘Placing Power’ of the selling banks will be a vital factor in the successful launch of a new issue, i.e., it is crucial that the selling banks should be able to place the bonds with buyers. To help the selling process, a ‘Prospectus’ will be issued giving information about the terms and conditions of the bond, the name and details of the issuer, the purpose of the loan and selling information.
• Eurobond issues in the UK are usually constituted under a trust deed. The bank which is responsible for making payments to the bondholders will act as their trustee