Standby agreement

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Standby agreement

In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
In addition, the government is expected to meet a large part of its short-term financing needs through the issuance of a eurobond guaranteed by the US government, and a possible request of extending the Standby Agreement (SBA) already in place with the International Monetary Fund (IMF).
In addition, Tallwood has agreed to purchase an additional USD11.25m of common stock at the same per share price (the standby agreement).
Together with 30 billion euro from a standby agreement with the International Monetary Fund (IMF), a loan package of 110 billion euro was established.
Key new flows during the week included 1) issuance of NOC by State Bank of Pakistan to Fauji Foundation for the acquisition of AKBL, 2) a commitment demanded by the IMF from all political parties that the terms of agreement for a fresh 3-year standby agreement (SBA) will be adhered to by the next government and 3) Remittances for 1HFY13 rising to US$7.2 billion, up 12.5%YoY.
Therefore I think it is here that the most delicate discussion will be held, in a context in which the reform of the state-owned companies was a key point in the agreement we are part of,' said Ionut Dumitru.A mission of the International Monetary Fund, headed by Erik de Vrijer, will be in Bucharest between January 15 and 29 for the 7th and the 8th evaluation of the standby agreement with Romania.
In addition, Jamaica's fiscal position, macroeconomic parameters and external liquidity are set to improve further following its standby agreement with the IMF.
Mohsin Khan was a director of IMF in November 2008 when Pakistan negotiated a standby agreement with the multilateral lending agency.
The Ukrainian authorities have requested a two-year, $16.5 billion standby agreement with the International Monetary Fund.
Under a three-year standby agreement that expires next February, the government has been running a primary budget surplus (before debt interest payments) equivalent to 6.5 percent of gross domestic product.
Manufacturers already burdened with tax and rising fuel costs under the low-defunct IMF standby agreement, have called on the government to negotiate new rates with banks to stop the crisis from spreading into other sectors.
Under the standby agreement which the government had to undergo after suspension of the Extended Structural Adjustment Facility (ESAF) by IMF, due to the government's failure to meet the IMF imposed conditionalities.

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