Dividend irrelevancy theory and Pricing guidance: Difference between pages

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In financial theory dividend payments and policies should be irrelevant when financial markets are efficient.  
''Securities - issuance - pricing - initial price thoughts.''


But in practice decisions about dividend levels are important because of:
In the context of securities issuance, pricing guidance is an intermediate stage of pricing discussions with potential investors, after initial price thoughts and before final pricing.


#Their informational content. This informational content is known as ''[[signalling]]''.
Pricing guidance is sometimes known as Initial Pricing Guidance (IPG).
#The potential to move closer to, or away from, a firm's optimal capital structure.
 
#Possibly, [[clientele]] effects.
 
:<span style="color:#4B0082">'''''How price guidance works in practice'''''</span>
 
:"Once the book building process has started, [intermediary] banks release updates on pricing (also known as price guidance) and it is almost exclusively one way: tightening.
 
:This stage allows banks to test the order book with an improved pricing for their client (the bond issuer).
 
 
:After the guidance is released, if investors pull their orders below the targeted issue size, then the tightening has been too aggressive.
 
:Conversely, if investors stay in the deal and the order book is still multiple times the targeted size of the new issue, then there is room for further tightening..."
 
:''Is Initial Price Talk a genuine price discovery tool - Charles de Quinsonas - Bond Vigilantes - for Investment Professionals only - January 2024.''
 
 
:<span style="color:#4B0082">'''''Heathrow's sustainability-linked bond priced at tighter end of guidance'''''</span>
 
:"Following strong engagement from more than 100 investors, the deal was announced with Initial Price Thoughts of MS+165-170bps.
 
:With demand proving to be strong, updated pricing guidance of MS+150bps was released, after which the orderbook continued to grow and peaked at €2bn.
 
:Consequently, Heathrow was able to set a final size of €650m and price at the tighter end of guidance at MS+148bps."
 
:''ACT Deals of the Year Awards 2023: Bonds below £750m winner.''




== See also ==
== See also ==
* [[Dividend]]
*[[Aggressive]]
* [[Lintner]]
*[[Arranger]]
* [[Residual theory]]
*[[Bond]]
* [[Rights issue]]
*[[Bond vigilante]]
* [[Theoretical ex-rights price]]
*[[Book build]]
* [[Capital structure]]
*[[bp]]
* [[Clientele]]
*[[Guidance]]
*[[Signalling]]
*[[Initial Price Thoughts]]  (IPT)
*[[Investment bank]]
*[[Issue]]
*[[Mid-swap]]  (MS)
*[[Order book]]
*[[Oversubscribed]]
*[[Price discovery]]
*[[Price formation]]
*[[Price talk]]
*[[Price whispers]]
*[[Pricing guidance]]
*[[Secondary market]]
*[[Sustainability-linked bond]] (SLB)
*[[Tightening]]
*[[Widening]]
 
 
==Other resources==
 
*[https://bondvigilantes.com/blog/2024/01/is-initial-price-talk-a-genuine-price-discovery-tool/ Is Initial Price Talk a genuine price discovery tool - Charles de Quinsonas - Bond Vigilantes - for Investment Professionals only - January 2024]
 
*[https://www.treasurers.org/hub/treasurer-magazine/act-doty23-bonds-above-750m ACT Deals of the Year Awards 2023: Bonds above £750m winner - BAT]
 
[[Category:Accounting,_tax_and_regulation]]
[[Category:Financial_products_and_markets]]

Revision as of 03:12, 30 March 2024

Securities - issuance - pricing - initial price thoughts.

In the context of securities issuance, pricing guidance is an intermediate stage of pricing discussions with potential investors, after initial price thoughts and before final pricing.

Pricing guidance is sometimes known as Initial Pricing Guidance (IPG).


How price guidance works in practice
"Once the book building process has started, [intermediary] banks release updates on pricing (also known as price guidance) and it is almost exclusively one way: tightening.
This stage allows banks to test the order book with an improved pricing for their client (the bond issuer).


After the guidance is released, if investors pull their orders below the targeted issue size, then the tightening has been too aggressive.
Conversely, if investors stay in the deal and the order book is still multiple times the targeted size of the new issue, then there is room for further tightening..."
Is Initial Price Talk a genuine price discovery tool - Charles de Quinsonas - Bond Vigilantes - for Investment Professionals only - January 2024.


Heathrow's sustainability-linked bond priced at tighter end of guidance
"Following strong engagement from more than 100 investors, the deal was announced with Initial Price Thoughts of MS+165-170bps.
With demand proving to be strong, updated pricing guidance of MS+150bps was released, after which the orderbook continued to grow and peaked at €2bn.
Consequently, Heathrow was able to set a final size of €650m and price at the tighter end of guidance at MS+148bps."
ACT Deals of the Year Awards 2023: Bonds below £750m winner.


See also


Other resources

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