1 Because both JP Morgan and Merrill Lynch promised to underwrite $17.5 billion of the debt financing and $6 billion in the bridge loans and the another $1.5 billion of credit lines. FCX’s two equity related transactions were led by JP Morgan and Merrill Lynch as joint book-runners. Big risk happened to the FCX interests and these two firms. FCX’s book running and M&A were controlled by the two firms which facilitated M&A transaction. Than, the two firms equally shared fees and league table credit for these transactions. It is a risker way to commitment to provide bridge loans.
2 (1) It is the leading syndicated and leveraged finance platform worldwide, lending money to private equity firms or corporations for leveraged acquisitions. They also provide liability management and financial restructuring advice to corporate clients and private equity portfolio companies. (2) Because the FCX wants to acquire a larger company and the large number of debt, and the group has to do the analysis of the capital and credit ratings and to sell debt to other investors. When the firm issues a press release describing a merger, it is the first time that an individual in sales and trading will hear of it.
3 Capital risk is the financing risk associated with investment bank’s underwriting commitment in relation to financing an acquisition and underwriting transactions. If the bank commits to providing a loan, it undertakes in relation to an acquisition.(2) If the firm facing market risk, the capital set aside will make influence. A firm set aside capital means making the cash in the safe situation, same meaning with the risk free security, which contains the return under the requirements of the shareholders’ equity return. The reputation risk is that comes from associating the investment banking firm with the company for which it is raising capital. Serious problems experienced by