Investments banks decide where and how to market newly issued bonds, such as by placing advertisements in the financial press, including The Wall Street Journal or Barron's. Alternatively, banks use an established network of secondary market broker-dealers to sell new issues directly to the public.
Investment banks underwrite corporate bonds and as such assume the risk of buying newly issued bonds. The banks charge fees to the corporation issuing the bonds for this service. The underwriting banks sell the bonds directly to the public or to a broker-dealer. Banks also direct established investors to brokers for specific new issues.
Banks sometimes choose to sell to large institutional investors, such as insurance companies or government retirement funds. In 2014, Forbes reported that low yields from government bonds increased demand for high-yield corporate bonds, outpacing supply. As such, investment banks were making more money on underwriting fees than trading, prompting sales directly to large-volume buyers.
Under the scenario where bonds are purchased for investment purchases only and not for resale, the new issues are not registered with the Securities and Exchange Commission. In 2015, the SEC called for regulators to standardize new issues to make it easier for retail investors to trade through electronic exchange transactions. The goal is to increase liquidity in the corporate bond market.