Please Sir … May I have some more?

Bond allocations are sexier than stock market IPO allocations. For example, the gigantic $49 billion Verizon bond issue from last September reportedly gave its recipients an instant 5% gain, or nearly $2.5 billion.

That’s almost equivalent to the market cap of an S&P500 company.

It is also roughly equal to 1.5 year’s worth of interest on that bond.

But half the gain went to just 10 clients of the underwriters who together took half the deal.

Finra is investigating the allocation game in bonds, trying to understand how it hurts the smaller bond investors who are excluded and can’t compete when missing that sort of one day performance.

But the other losers here, the real losers, are the Verizon equity investors. The $2.5 billion gain for preferred underwriting clients is the mirror image of an “extra” $2.5 billion in cost of capital that has been locked in for the company. That amount is more than an entire quarterly dividend payment for equity investors.

Bond market inefficiencies definitely impact the real economy.