pay-to-play Hear it!

pay-to-play Finance Definition

  1. Refers to a company pressuring investment banks to provide it with ordinary loans and credit facilities in exchange for the company giving the bank the desired investment banking work. Investment banks typically want to provide lucrative advisory services, such as merger advice and helping companies raise equity and debt. Less lucrative is providing loans or credit facilities, so companies attempt to entice investment banks into providing those services through pay-to-play. The term increasingly came into use after the market boom of the late 1990s ended and credit became harder to get.
  2. Refers to underwriters contributing to the election campaigns of elected officials in order for the underwriter to have an advantage in securing contracts to underwrite municipal bonds. This usage is now rare, as legal changes have made the practice difficult, if not illegal.