What is an Underwriting Spread?
” Underwriting spreads are the difference between the price per share that is paid to an issuing corporation by an underwriter or underwriting group, and the public offering price that the underwriter offers to the public. The underwriting spread generally represents the net proceeds that the underwriter will realize from the investment. Depending on the size of the securities issue and the price that the shares can command on the open market, the underwriting spread can be significant. . There are several factors that can go into determining the size of the underwriting spread.
Underwriting spreads are the difference between the price per share that is paid to an issuing corporation by an underwriter or underwriting group, and the public offering price that the underwriter offers to the public. The underwriting spread generally represents the net proceeds that the underwriter will realize from the investment. Depending on the size of the securities issue and the price that the shares can command on the open market, the underwriting spread can be significant.