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Underwriting syndicate |
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Underwriting syndicateA group of investment banks that work together to sell new security offerings to investors. The underwriting syndicate is led by the lead underwriter. See also: Lead underwriter.Underwriting syndicate Similar MatchesFirm commitment underwritingFirm commitment underwritingAn underwriting in which an investment banking firm commits to buy and sell an entire issue of stock and assumes all financial responsibility for any unsold shares. UnderwritingUnderwritingActing as the underwriter in the issue of new securities for a firm. Underwriting CommissionUnderwriting CommissionThe fee investment bankers charge for underwriting a security issue. Underwriting spreadUnderwriting spreadThe income that is generated by the underwriting syndicate and the selling group, which is essentially the difference between the amount paid to the issuer of securities in a primary distribution and the public offering price. UnderwritingUnderwritingA bank or other financial institution's guarantee to a company that it will buy a certain number of shares in a company's new issue or rights issue, should the issue not be fully subscribed by other investors.From the company's point of view, having its new issue underwritten is a form of insurance. It means that if it has priced an issue too high and the market shuns it, the company can still be sure that it will get money from the new issue.Of course, security comes at a price. Underwriters charge a fee for the back-up they provide. If the new issue is very popular, it will pocket that fee and make a handsome profit. Occasionally, they get badly burned. New issues underwritten immediately before the 1987 stock market crash lost a lot of money.Sometimes companies do a rights issue at a deep discount to reduce the underwriting fees. Further SuggestionsAll or none underwritingUnderwriting agreement Underwriting income Underwriting fee Negotiated underwriting |
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