Gross spread

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Gross spread


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.

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.

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.

References in periodicals archive ?
Gross Spread Per Metric Ton -- For the three months ended September 30, 2015 the Company reported gross spread per metric ton on an aggregate basis of $21.
An Underwriter s Counsel Will Be An Expense Of The Investment Bank For Its Gross Spread ETC.
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.
Surprisingly, the refunded water revenue bonds were sold in a competitive sale in 1995 with an average gross spread of $7.
The gross spread - the difference between the price given to the seller and the price at which the shares were sold - was $1.
Gross spread on marine fuel represents the margin that the Company generates on sales of various classifications of marine fuel oil ("MFO") or marine gas oil ("MGO").
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.
1) Gross spread is available for 741 of these 838 issues.
The aggregate gross spread of investment yield over cost of money on all AEL annuity products for the first nine months of 2007 was 2.