Anantam Energy's Rs 1,000 crore ten-year bond draws a Rs 2,600 crore book from insurers, mutual funds, banks, hedge funds and corporate treasuries. The issuer wants long-term holders. How do you allocate, and what is each type's fill rate?

Allocate by how long each buyer is likely to hold: insurers 55% of their order, mutual funds 40%, banks 35%, corporate treasuries 30% and hedge funds 15%. That gives Rs 385, 320, 175, 60 and 60 crore. Real-money holders take 70.5% of the bond against 57.7% under pro-rata, and the bonds likely to be sold in the first week fall from about Rs 196 crore to Rs 116 crore, which steadies the price.

Think of a popular concert where tickets go to whoever asks for the most. Touts ask for hundreds, get dozens, and the resale market floods on the night. A bond sold to buyers who intend to sell it quickly comes straight back onto the market, and that supply pushes the price down in the first days of trading. The issuer sees its new bond trade below issue price, and investors remember that on the next deal. A steady aftermarketTrading in a newly issued bond in its first days and weeks after it is freed to trade. is part of what the syndicate desk delivers.

Not at face value. Some orders in a hot book are inflated, placed large in the knowledge that they will be cut back, so the real demand from each type is less than the order line shows. Insurers and mutual funds tend to order what they want; fast money often orders two or three times what it wants. Straight pro-rata, 38.5% for everyone, would give hedge funds about Rs 154 crore, rewarding exactly the padding you should discount.

Apply the desk's selling estimates to both allocations. Under the discretionary allocation about Rs 116 crore is likely to be sold in the first week; under pro-rata it would be about Rs 196 crore, 1.7 times as much. Insurers and mutual funds end up holding 70.5% of the bond against 57.7% under pro-rata, which is the register the treasurer asked for.

Yes, a little. Fast money provides liquidity: it gives the bond a two-way market in the first days, and an issuer that returns every year benefits when its bonds are seen to trade. Cutting a type to zero also costs goodwill on the next deal, when the book may be thinner and every order counts. The skill is proportion, not exclusion. The 2.6x cover also gives you room to tighten the final yield, and price-sensitive orders that drop out when you do are telling you who was there for a quick gain.

Say the limit before you finish. On India's electronic bidding platform, allotment follows set rules rather than the banker's discretion, so this judgement belongs to bookbuilt deals such as offshore bonds and some private placements; confirm the current rules for the deal in front of you.