We've previously discussed the main features of loans and bonds, as well as the respective advantages and considerations of the two, but while there's usually quite a good high level understanding of how the loan arrangement process works, most people that are new to the financial services industry probably don't know exactly how a bond issuance actually takes place.

So let's give a high level introduction to the journey from conception to market. It involves multiple stages, each critical in ensuring the success of the bond issue.

It should be noted at this point that the process we're going to outline refers to corporate bonds, and while the government bond issuance process shares some of the same elements, it generally follows its own unique path.

Let's start at the beginning. When a corporation decides to issue a bond for the first time, the actual issuance journey begins with a company consulting a bank to discuss its need for financing the bank. Acting as a navigator assesses the company's financial situation to determine the suitability of a bond issue. This stage is critical for setting the course, understanding why the company needs to raise capital and how much is required.

Securing a credit rating is the next waypoint. If the company doesn't have one, the bank advises on the most appropriate rating agencies based on the company sector. This step involves the company under the guidance of the bank, preparing for and attending preliminary meetings with the rating agencies.

Next, the prospective issuer embarks on what is known in the industry. As a roadshow, they meet with potential investors in major financial hubs presenting their case and addressing queries. This stage is about testing the waters, gauging general investor interest, understanding the market's appetite for the company's risk, and determining the price range and maturity of the proposed bond. If the response is tepid, the issuance may be postponed. Once sufficient interest is confirmed, the company and the bank set a tentative date for issuance contingent on market conditions at the time.

Now onto the actual issuing process. The first step here is book building. Picture this as mapping the journey. The bank facilitating the bond issuance process, who also referred to as the underwriter, reaches out to potential investors to gather orders for the bond.

Pricing is the next critical leg of the journey. It involves setting the bonds interest rates, which is heavily influenced by current market conditions, the corporation's credit rating and investor feedback from the book building phase. It's a delicate dance balancing investor demand with the amount the corporation wishes to raise.

Then we have the allocation. This is where the underwriter determines which investors will receive bonds and how much each will receive. It's a bit like dividing the treasure based on who's shown the most interest and who is willing to pay the best price.

The journey concludes with the bonds launch to the market where it begins to trade and the corporation receives the capital it sets out to secure.