Gross spread

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Gross spread

The fraction of the gross proceeds of an underwritten securities offering that is paid as compensation to the underwriters of the offering.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Gross Spread

In a public offering, the difference between the price an underwriter pays an issuer and the price at which it sells the offering to the public. That is, an underwriter pays the issuer an agreed-upon price to purchase an issue, which it then attempts to place with investors. When it places the issue, it charges the investor a certain price like any other trade. The difference is known as the gross spread; it forms the bulk of an underwriting firm's profits. See also: Fully subscribed, Overbooked, Underbooked.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

gross spread

The difference in the price that an investor pays for a new security issue and the price paid the issuer by the lead underwriter. The gross spread is a function of a number of variables including the size of the issue and the riskiness, or price volatility, of the security. Also called underwriting spread.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Gross spread.

In an initial public offering (IPO), the gross spread is the difference between what the underwriters pay the issuing company per share and the per share price that investors pay. It's usually about 7%.

For example, if a stock is to be offered to the public at $10 a share, the underwriters may pay the issuing company around $9.30 per share. With millions of shares being sold, the 70 cents per share adds up to millions of dollars for the investment bank.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Gross spread was lower from 68 per cent to 64 per cent and profit after taxation stood at Rs8.25 billion.
The gross spread or net spread before provisions enhanced to 42.82 percent from 42.06 percent.
KARACHI -- Bank Al-Habib Limited has done a commendable job in reducing cost of deposits, evident by a sharp decline in mark-up expenses and a much improved gross spread ratio, it emerged on Wednesday.
For two successive years, about this time in 2008 and 2009, the NFA (National Food Authority) Council contracted to import a total of 3.775 million metric tons (mmt) of rice principally from Vietnam-1.5 mmt in December 2008 through a government-to-government (G-to-G) deal with Vietnam's State Grains Agency at $549.50 CNF/mt, or a gross spread of $227/mt against the international benchmark of $323 FOB/mt prevailing at the time for Vietnam rice.
Gross spread (as reported by SDC) is the total underwriter fee expressed as a percentage of the domestic principal amount offered.
If a CU only earns a 75 basis point gross spread on a new deposit and then has to net out NCUA insurance or assessment costs and account servicing, the result is "razor-thin margins at best, if not upside down," Colby said.
The average gross spread for common equity takedowns from shelves is 3.88 percent, but the gross spread for issuances using the traditional registration procedure is 4.91 percent.
We exclude all financial firms (one-digit Standard Industrial Classification [SIC] Code 6), all firms in regulated industries (one-digit SIC Code 4), and all firms whose gross spread data were missing from the SDC database.
According to statistics published in The Bond Buyer, the daily newspaper reporting on the municipal bond market, the average annual gross spread for all competitive sales (across all types of debt) between 1985 and 1991 was $10.10 per $1,000 bond.