In the launch and road show stage, t he lead manager announces the bond issue publicly and promotes the transaction to prospective investors, inviting them to buy the bonds once they are issued. The lead manager sends invitation containing the proposed terms of the bond issue to the prospective managers, who then review it and decide to join the syndicate and acts as managers. The prospective managers then decide whether they want to join the syndicate of banks and underwrite the issue.

The issue stage of bond issuance involved two stages: signing - the managers sign the subscription agreement, and agrees to subscribe the bonds on closing; and closing – the trust deed is signed and the bond instrument is created. The investors receive the bonds from the issuer in exchange for payment of the purchase price of the bonds.

In the post-issue stage, the issuer pays interest to the bondholders as agreed until the bonds reach maturity, when the issuer will repay the principal amount of their original investment to the bondholders.

FINANCING PPPS WITH BONDS

The process of financing of PPP projects through project finance loan involve submission of the term sheet confirming the indicative pricing and commitment level of the financing prior to submission of the bids. Similarly, in order to raise financing for PPP projects through bonds, the private party has to first appoint an investment bank as a lead manager. The task of the lead manager is to arrange and provide the underwriting for the bond, but it need not necessarily provide the funding itself. The lead manager also provides the term sheet but unlike the case of bank loan, the term sheet will outline the proposed bond terms. The proposed bond terms focus more on the market considerations such as the target bond investor market (i.e. insurance market), the marketing strategy, target rating (e.g. A+ rating by Standard & Poor's), target price, listing location, identity of the trustee and paying agent, and fee structure.

The lead manager can approach the potential bond investors at an early stage of the financing process. However, pricing indication at the early stage will be subject to rating and market developments. The bond investors allocate funds on the basis of the asset class, yield, and ratings of the bond and not based on the long-term relationships or project analysis. The target pricing for the project bond will therefore be determined by reference to the interest rate (reference rate) for a long term government bond of similar tenure and the spread over the reference rate for a range of potential ratings.