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Encyclopedia of Municipal Bonds: A Reference Guide to Market Events, Structures, Dynamics, and Investment Knowledge by Joe Mysak

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negotiated sale

With a negotiated sale, the dominant method of bond underwriting since 1976, issuers choose the underwriters who are going to sell their bonds and then sit down and discuss terms, either with or without a financial adviser at the table.

Thinking about it another way: with a competitive sale, bonds are bought by the underwriter, and then sold to investors. In a negotiated transaction, the bonds are sold—the underwriters pretty much know where all the bonds are going, and at what price—and then bought by the underwriters (in other words, the deal is closed). Underwriters say this is one of the benefits of negotiation: they can line up investors far in advance of the sale and can tailor bonds to suit the needs of investors.

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