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.
