CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
A corporation has registered a large amount of debt with the securities regulator and plans to sell portions of it over the next two years as funding needs and market conditions allow. This issuance method is best described as a:
This is a shelf registration. The issuer registers a total amount of securities once and then sells portions over time when funding needs and market conditions suit. A bought deal and a best-efforts offering describe how an underwriter handles risk, not delayed sales.
- Abought deal
- Bshelf registrationCorrect
- Cbest-efforts offering
Explanation
A shelf registration lets an issuer register a total amount once and sell tranches later at its discretion. A bought deal is one where a dealer buys the whole issue upfront. A best-efforts offering concerns the dealer's risk, not delayed sales under one registration.
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