The underwriting spread is the money difference between the amount paid by the
underwriting group in a new issue of
securities and the price at which securities are offered for sale to the public. It is the underwriter's gross profit margin, usually expressed in points per unit of sale (
bond or
stock). Spreads may vary widely and are influenced by the underwriter's expectation of
market demand for the securities offered for sale,
interest rates, and so on.
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The income which is generated by the underwriting security and the selling group, which is essentially the difference between the amount paid to the
issuer of
securities in a primary distribution and the
public offering price.
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