Private Placement
Banks
Public Bonds
Exempt from registering with SEC
Registration
Required to be registered with SEC
Typically short term (3-5 years) Bullets or amortizing structure
Long term (up to 25+ years) Bullets or amortizing structure
Tenor
$20 million - $500 million in single or multiple issuances
Wide range ($15 million in a bilateral transaction with a single investor to $2.5 billion in a 'mega'-syndicated transaction)
>$300 million in a single issuance to assure index eligibility
Amount
Typically floating
Fixed or floating
Typically fixed
Rate
Floating: Reducing schedule
Fixed: Make-whole (T+50 bps) Floating: Reducing schedule
Make-whole (T+20 to 50 bps; ~15% of credit spread)
Capability
None required
Typically required
Public Ratings
Ongoing fees
Minimal if direct Placement fees if agented
Registration/ratings fees Underwriting fees
Fees
Local, regional and national banks
Accredited Investors, typically institutional Single, clubs or larger groups Buy-and-hold nature Smaller investor base allows for amending structure as neeeded
Institutional investors Sizable groups Can be active traders Broad investor base with limited relationship
Investors
Covenants associated with a traditional bank facility
Similar to traditional bank facility
Largely no financial covenants
Covenants
Shorter time to funding
4-8 weeks; flexible with regard to locking in rate
Shorter time to funding for seasoned issuer; can fund three days after commitment
Execution
Typically about short term (3-5 years) Bullets or amortizing structure
Wide range ($15 million in a bilateral transaction with a single investor to $2.5 billion in a 'mega'-sundicated transaction)
4-8 weeks; flaxible with regard to locking in rate