Standby agreement

(redirected from Stand-By Arrangements)

Standby agreement

In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.

Standby Agreement

An agreement between the issuer of a security and its underwriters stating that the underwriters are responsible for any unsold portion of the issue. That is, the underwriters agree to buy the remainder of a new issue if they are unable to place its entirety with investors. This transfers the risk of the unsold portion of the issue from the issuer to the underwriters. This guarantees that the issuer will raise the capital it intends to raise, but leaves the underwriters with the possibility that they must purchase an issue with low value. As a result, underwriters charge a standby fee for a standby agreement. It is also called firm commitment underwriting or a backstopped deal.
References in periodicals archive ?
Nicki Bennett, Senior Humanitarian Affairs Officer, OCHA, Pakistan, said that UN had taken all the stand-by arrangements to grapple with floods in Sindh and half-a-million people in the vulnerable districts of Sindh were relocated to safer avenues.
64 million, will automatically take effect upon the completion by the International Monetary Fund of the final review of a three-year implementation of stand-by arrangements.
IMF stand-by arrangements are intended to provide short-term assistance to countries with balance of payments difficulties in exchange for their adoption of policies to tackle the issue.
The International Monetary Fund (IMF) on Wednesday approved the third and last disbursement of $135 million under its stand-by arrangement signed with the heavily indebted South Asian country.
Turkey has signed 19 stand-by arrangements with the IMF, but it could successfully complete only the last two of them.
Turkish officials and an IMF delegation have been negotiating on a possible loan deal for months after Turkey completed in May 2008 a 10-billion USD stand-by arrangement with the Washington-based lender.
123 million, will automatically take effect upon the final review of a three-year implementation of stand-by arrangements.
Stand-by arrangement is one of the mostly-used IMF mechanisms.