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CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers

A corporate issuer sells newly issued bonds directly to a group of institutional investors without making a public offering and without registering the securities with the regulator. This transaction is best described as a:

This is a private placement. New bonds sold directly to a small group of institutional investors, without a public offering or registration with the regulator, are privately placed. Public offerings and shelf registrations both involve registering securities with the regulator.

  1. Aprivate placementCorrect
  2. Bshelf registration
  3. Cpublic offering

Explanation

Selling new bonds directly to a limited group of qualified investors without a public offering or full registration is a private placement. A public offering is sold broadly and registered. A shelf registration is a registration that allows later sales, so it involves registration.

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