Stabilization Period (redirected from Stabilization Periods)

Stabilization Period

The period between the offering of a new issue and the time at which it is fully distributed. During the stabilization period, underwriters serve as counterparties on the secondary market to help keep the price of the new issue at or above the offering price on the primary market. If the market price falls below the offering price, the underwriters will be unable to place the issue with investors because interested parties will buy at the lower price available on the secondary market. After the issue is fully distributed, there are no more shares or bonds to sell on the primary market and the stabilization period ends. See also: Price stabilization.

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stabilization period

The time elapsing between the offering of a security issue for sale and its final distribution, during which the underwriter enters the secondary market in order to stabilize the price of the security. The underwriter attempts to keep the secondary market price of the security from falling below the offering price. Also called price stabilization.