The company said that its investment adviser will bear all of the gross underwriting spread
and pay the underwriters an additional supplemental payment of about USD0.
Identify the components of underwriting spread
including take-down, commissions, risk, expenses and management fees.
Underwriters are compensated in the form of an underwriting spread
, or a discount from the face amount of the bonds.
1,2) Yet, a major source of underwriter revenue lies in the underwriting spread
, which in a firm commitment offering is the difference between the price paid for the issue by investors and the price paid to the issuer divided by the issue proceeds.
Market competition has allowed issuers to compress the underwriting spread
on their deals so low that broker-dealers are pricing primary deals at a wholesale level and thus selling almost exclusively to wholesale buyers.
Third, underwriting expenses (both the underwriting spread
and the other expenses of issuing equity) are negatively related to management quality and reputation.
Moreover, national statistics showed that the average gross underwriting spread
--that is, the underwriter's compensation for purchasing bonds--of bonds offered through negotiated sale was higher than the average gross underwriting spread
of bonds offered using the competitive sale method.
This paper focuses on the measurement of underwriting spread
effects for information costs, for bonds with structural or tax complexity, and for bonds containing equity-conversion options or bond-put options.
1998) and to lower underwriting spreads
and offering yields for nonconvertible debt issues (Miles and Miller, 2000).
Little money can be made as a co-manager in the current market because underwriting spreads
are usually so slim.
Erdman's hero quickly realizes that rating fees and municipal underwriting spreads
offer little opportunity for a return to the high profit margins of his leveraged-buyout days.