Securities Underwriting

The underwriting of securities encompasses the support for the issue of new securities to members of the public (public placement) or a wider, but selected, investor base (private placement). The types of securities underwritten can be very varied. It is most common in underwriting research to consider the issuing of shares to the general public for a subsequent listing on a stock exchange, a so-called Initial Public Offering (IPO). Shares by companies already listed on a stock exchanged may also be offered in a Seasoned Equity Offering (SEO), which will usually form part of raising additional capital for the company. In the case of both IPOs and SEOs, it is common for new shares to be created that are then sold, but we might well see the sale of shares already held by other investors. Another common security to be issued is a bond, either by companies, governments, or comparable public bodies. A wide variety of other securities are underwritten by investment banks, such as convertible bonds, warrant bonds, asset backed securities, collateralized debt obligations, or catastrophe bonds.