Underwriter Syndicate
 |
Definition of 'Underwriter Syndicate'A temporary group of investment banks and broker-dealers who come together to sell new offerings of equity or debt securities to investors. The underwriter syndicate is formed and led by the lead underwriter for a security issue. An underwriter syndicate is usually formed when an issue is too large for a single firm to handle. The syndicate is compensated by the underwriting spread, which is the difference between the price paid to the issuer and the price received from investors and other broker-dealers.Also referred to as an underwriting group, banking syndicate and investment banking syndicate. |
 |
Investopedia explains 'Underwriter Syndicate'An underwriting syndicate mitigates risk, especially for the lead underwriter, by spreading it out among all the participants in the syndicate. Since the underwriting syndicate has committed to selling the full issue, if demand for it is not as robust as anticipated, syndicate participants may have to hold part of the issue in their inventory. This exposes them to the risk of a price decline.In exchange for taking the lead role, the lead underwriter gets a larger proportion of the underwriting spread and other fees, while the other participants in the syndicate receive a smaller portion of the spread and fees. |
Related Definitions
Articles Of Interest
-
Is Insurance Underwriting Right For You?
If you have excellent analytical skills and an eye for detail, this may be your calling. -
Brokerage Functions: Underwriting And Agency Roles
Learning about these various activities can give insight into how securities are issued and traded. -
Greenshoe Options: An IPO's Best Friend
Find out how companies can save or boost their public offering price with these options. -
Do underwriters make guarantees to sell an entire IPO issue?
Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the necessary procedures to raise investment capital for a company issuing ... -
What Was The Glass-Steagall Act?
Established in 1933 and repealed in 1999, the Glass-Steagall Act had good intentions but mixed results. -
What Is Private Equity?
This investment vehicle attracts wealthy investors to increase the value of portfolio companies. -
Why Companies Stay Private
Many private companies prefer to stay private and find alternate sources of capital. Find out what firms have to gain by eschewing the windfall from a flashy IPO. -
Uncommon Jobs For Your Finance Degree
Not everyone can land the glamour jobs, but the world of finance has a lot more to offer. Here are some uncommon jobs in finance that you might want to consider. -
The Basics Of The T-Bill
The U.S. government has two primary methods of raising capital. One is by taxing individuals, businesses, trusts and estates; and the other is by issuing fixed-income securities that are backed ... -
Learn The Lingo Of Private Equity Investing
Because of the non-public nature of private equity, it can be difficult to the learn the lingo. We break it down here.
Free Annual Reports