Issue

An issue is typically effected via an underwriting syndicate, although some companies also opt for a direct offering.

The advantage of issuing securities with the support of a syndicate is that the issuer can utilise the syndicate bank's existing business connections to the investing public and its extensive sales system for placing the securities. As a rule, the syndicate purchases the entire issue from the issuer at the underwriting price and re-sells the securities to investors at a slightly higher price, also called the offering price. In doing so, the syndicate assumes the risk associated with the placement of the securities.

The underwriting method is especially suited for large-scale international issues. Recently, global issuing syndicates have begun to form to handle the worldwide placement of securities (e.g., the offering of shares by Deutsche Telekom AG); these syndicates have regional sub-syndicates (e.g., for the regions of Europe, North and South America and Asia).