Securitization and Structured Finance Post Credit Crunch: A Best Practice Deal Lifecycle Guide

7

At close

7.1 DEAL DOCUMENTS, MARKETING, AND ROADSHOW

7.1.1 Deal documents

Key documents that are produced and used during the marketing phase and roadshow are given in the following subsections.

 

Term sheet

The term sheet is often one of the first documents related to a new bond issuance that becomes available. Generally, it is a non-binding agreement or, simply, a document that expresses the basic terms and conditions for a new security.

Term sheets are not much different from “letters of intent” in that they are usually non-binding documents which simply express preliminary terms, and in structured finance markets these are usually more in the form of a non-agreed proposal. Term sheets are usually fairly brief and outline some (not all) of a deal’s specifics in bullet-point-style narrative or very brief descriptions.

 

“Red” or “red herring”

The “red herring” or, in short, just “Red” is a preliminary filing and gets its name from the warning—printed in red on the title page—stating that the document is currently being reviewed by the SEC (or other relevant regulators) and, hence, can be subject to change.

Red herrings usually represent a summary of a forthcoming formal prospectus and may often not contain certain offering details, such as the price of the security, total value of the offering, and the number of shares that will be sold, for instance.

 

“Black” or black-lined version

Each prospectus typically goes through various stages of a drafting process and each resulting ...