Bear Stearns has declared its first Internet-based auction of corporate debt securities a success. The transaction was executed on Bear Stearns' proprietary Dutch Auction Internet Syndication System (Daiss).
The $600 million 7-year transaction was undertaken on behalf of The Bear Stearns Companies. The transaction generated substantial investor interest, says the company, with 80 institutional investors generating an aggregate book of demand in excess of $1 Billion. The $600 million transaction was allocated among fifty-seven participating investors. The deal priced at a spread of 182 basis points over the relevant Treasury benchmark, having been launched with an indicative spread range of 182 to 185 basis points.
During the two-hour dealing process, investors utilised the rules-based auction system to express their interest and price sensitivity for the issue. "The transaction met every expectation we had as both an issuer and underwriter. We achieved a substantial book of interest and, consequently, realised economic terms that are highly attractive," says Samuel Molinaro, chief financial officer of The Bear Stearns Companies.
As with traditional syndicate practice, the transaction was preceded by 24 hours of investor marketing and is supported in the primary and secondary markets by an eight dealer co-management group. "We feel confident that follow-on investor interest in the transaction will ensure a seamless transition to the secondary market," says Jacques de Saint Phalle, senior managing director and head of US fixed income syndicate.