Primary market issuance is the process by which new securities are created and sold for the first time, with the proceeds going to the issuer. It is how companies, governments and other bodies raise money in the capital market. Once issued, the securities change hands between investors in secondary market trading, which provides liquidity but brings no new funds to the issuer.
The main forms are the initial public offering and follow-on offerings of shares, bond issuance by companies and governments, and the private placement of securities with selected investors. Government debt is usually sold by auction to appointed dealers. Corporate issues are normally arranged by investment banks, which advise on structure and timing, gauge demand through book building, set the price and allocate securities, often with an underwriting syndicate guaranteeing the sale. Public offers require a prospectus approved by the regulator, and the new securities are delivered to investors against payment on the closing date.