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Underwriting & Syndication Desk
With a reputation for strong pricing performance and a track record for execution in difficult markets, George K. Baum & Company has established itself as a proven leader in underwriting municipal securities.
Our Underwriting & Syndication Desk is responsible for pricing new issues, developing syndicates to distribute new negotiated issues and forming syndicates to purchase competitive issues. We employ some of the industry's most experienced and skilled underwriting/syndicate specialists who, unlike our competitors, spend considerable time educating investors about the issues we underwrite. These efforts are particularly important when our Firm is offering complex financings.
Underwriting Unsold Balances
In many transactions, an issuer is only able to complete the financing consistent with its goals and objectives if underwriters agree to purchase or "take down" unsold balances. George K. Baum & Company has repeatedly demonstrated its willingness to underwrite unsold balances in significant amounts to assist our clients. Rather than repricing the bonds at certain maturities, we took down the unsold volume, confident that we would be able to market it once investor demand returned to normal levels. Once we have priced an issue at what we believe is a fair price, we remain committed to that price and to the savings it brings the issuer. There are a host of reasons that might result in unsold balances, ranging from a sudden change in the market to a particular investor(s) deciding not to purchase specific securities just prior to or during the order period.
Underwriting unsold balances is often necessary, but must be done in recognition that certain characteristics should be exhibited before such a commitment is made. Among the characteristics are: 1) The unsold balance should not be concentrated in a limited number of maturities. 2) The amount of bonds underwritten in this fashion should be no more than 25% of the aggregate issue size. If these characteristics are not present, it may indicate that the transaction has not been properly priced and adjustments to coupons and/or yields are necessary to complete the financing. Just as an over-subscription of bonds indicates a need for repricing, a failure to attract orders creating unsold balances in concentrated maturities is also a signal of incorrect market pricing.