Can anyone Explain What is underwriting syndicate and how it is formed in Muni securities?With example?

In general, an underwriting syndicate is a group of investment banks that work with an issuer(city or state in a muni) to get the bonds out to the public. For an example if Atlanta, GA wants to sell muni bonds for a new school they will contact Goldman, JP Morgan and Citi to be in the syndicate. They will get together and figure out how much the city wants to make, and then they will either buy that many bonds or agree to get them sold. If they buy them from the city they will take them in to inventory and then try to sell them to investors. Lets say the 3 banks buy each bond for 85 from the city, they will turn around and sell them to the public for 95, and pocket the spread of 10 for taking the risk and doing the work. The city makes most of the money, the banks make a little and the public makes the interest and then gets to cash out at 100 when they mature.

dashi

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