Underwriting

Debt & Equity underwriting

Debt and equity underwriting is the concept of securing the price and sale of a new issue of stocks or bonds. If a firm has taken the risk and responsibility to sell a specific amount of securities, and it can't sell them as planned, they may have to buy them themselves.

Typically, there are two types of undewriting offers, firm commitment and best efforts. With a firm commitment offering, the underwriter is obligated to purchase security if they cannot find anyone else to buy it. With a best efforts offer, they are not.

Flows and levels

Underwriting activity reported by Thomson Financial ([1]) (numbers in $ billion) (number of isses in parenthesis):

Global Debt, Equity & Equity-related

• 2004: 5,693 (20,066) (Q4 2004 report)
• 2003: 5,326 (19,706) (Q4 2003 report)
• 2002: 4,257 (?) (Q4 2003 report), 3,902 (14,070) (Q4 2002 report)
• 2001: 4,112 (?) (Q4 2002 report)

Global debt & equity disclosed fees

• 2004: 15.401 (6,890) (Q4 2004 report)
• 2003: 14.461 (8,023) (Q4 2003 report)
• 2002: 14.762 (6,696) (Q4 2003 report), 14.130.7 (5,649) (Q4 2002 report)
• 2001: 17.930 (7,027) (Q4 2002 report)

Insurance underwriting

Underwriting may also refer to insurance; the electrical safety organization Underwriters Laboratories was founded by a group of insurers after watching the House of Electricity on a local fairground destroyed by fire due to faulty wiring. A leading underwriter is insurance broker Lloyd's of London.

Other

Underwriting may also refer to financial sponsorship of a venture.

See also

• Investment bank
• Thomson Financial League Tables

External links

• Underwriting