Gross spread


Gross spread

Gross spread refers to the fees that underwriters receive for arranging and underwriting an offering of debt or equity securities. The gross spread for an initial public offering (IPO) can be as high as 7% while the gross spread on a debt offering can be as low as 0.05%.

For example, if a company sells $100 million of shares in an IPO and the gross spread is 7%, the underwriting syndicate will receive fees of $7 million. These fees will be divided among the underwriters arranging the offering.

External links

* [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=498482 Underpricing versus Gross Spread: New Evidences on the Effect of Sold Shares at the Time of IPOs]
* [http://www.fma.org/SLC/Papers/ADRspreads.pdf How do investment banks price underwriting services for American Depository Receipts?]
* [http://www.ecb.int/pub/pdf/scpwps/ecbwp550.pdf Underwriter competition and gross spreads in the eurobond market]


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