Block P · Corporate finance & primary market
‹ NadirAlpha financial markets handbook: overview
Independent NadirAlpha working reference. Product and feature names mentioned are trademarks of their respective owners. No investment advice.
The primary market is the interface between companies and capital; whoever knows the issuance mechanics understands price anomalies and vested interests.
188 · IPO process & bookbuilding
Going public: selection of the syndicate banks, prospectus, roadshow, price range, order book (bookbuilding), allocation, greenshoe (over-allotment option for stabilization).
Assessing subscription decisions and price behavior after the first listing (lock-ups!).
Underpricing is intentional (a subscription incentive); many IPOs still underperform over the long term.
Not having lock-up expiry dates in the calendar.
45 · IPOs/new issues · 190 · Bond issuance (syndication, pricing)
189 · Capital increases & subscription rights
Issuance of new shares; with subscription rights (anti-dilution protection for existing shareholders, subscription ratio + subscription price) or with rights excluded (up to 10-20% common).
Managing subscription rights actively: exercise, sell; never let them lapse.
TERP (theoretical ex-rights price) is the calculation basis; the price markdown is mechanics, not a loss.
Letting subscription rights lapse unnoticed; a real loss of wealth.
190 · Bond issuance (syndication, pricing, new issue premium)
New issue via a bank syndicate: mandate, investor calls, order book, spread guidance down to the final spread; the new issue premium (NIP) = pickup over the secondary curve.
The NIP as a return source for existing investors; order book dynamics (oversubscription) as a demand signal.
Guidance is tightened on strong demand; the final NIP is often smaller than the initial one.
Subscribing without comparing against the issuer's own secondary curve (RELS!).
15 · Corporate bonds investment grade · 109 · Spread (G-spread, Z-spread, OAS)
191 · M&A basics
Takeovers/mergers: strategic vs. private equity, cash/share offer, premium, mandatory offer from 30% (Germany), squeeze-out.
Assessing takeover speculation and offer situations in the portfolio (accept? hold?).
The arbitrage spread between price and offer price reflects completion risk (antitrust, financing).
Judging offers without looking at minimum acceptance thresholds and top-up rights.
192 · Company valuation (DCF, multiples)
DCF = present value of future free cashflows (WACC as the discount rate, terminal value); multiples = valuation relative to peers (EV/EBITDA, P/E).
One's own idea of the price instead of market faith; sanity-checking price targets.
DCF is assumption-driven (the terminal value dominates); compute it as a range, never as a point value.
False precision; two decimal places with 10% assumption uncertainty.
95 · P/E ratio · 98 · EV/EBITDA
193 · Leveraged finance & private placements
Debt financing of buyouts (leveraged loans, HY bonds, unitranche) and non-public placements with selected investors.
Understanding the capital structure beneath one's own bond; access to private debt paper.
Covenant-lite documentation shifts risks to the creditor; read the documentation (or have it read).
Comparing private placement yields without an illiquidity and documentation discount.
194 · Schuldschein loans
A German instrument between loan and bond: a bilaterally documented loan, not exchange-listed, often used by mid-sized companies and states/municipalities; a buy-and-hold market.
Yield pickup for illiquidity; diversification in the rates book of institutional investors.
No market price: valuation is model-based; sale before maturity only possible to a limited extent.
Treating Schuldschein loans like bonds in liquidity planning.