New issues, whether stocks or bonds, are a means of raising capital for a company.
New shares are often issued through an initial public offering (IPO), which allows investors to buy shares of a previously private company for the first time.
Bonds, preferred and convertible securities can also be distributed as new issues to raise debt capital for the firm.
Bonds as new issues are considered a form of debt financing, while shares and IPOs as new issues are considered a form of equity financing.
Investors should be aware of the “hype” surrounding a new issue such as an IPO as it could go one way or the other.
Companies that are already public can conduct a new issue through a secondary offering.
A red herring is a preliminary prospectus filed with the SEC, usually in connection with an IPO, that omits key details of the issue, such as the price and number of shares offered.
In an undivided or eastern account, each underwriter takes responsibility for the sale of any shares that remain unsold by the other members of the syndicate.
A Western account is a type of AAU in which the parties to a consortium of underwriters agree to be responsible only for their own allocation of a new issue of securities.
The Depository Trust and Clearing Corporation (DTCC) is a financial services company that provides clearing and settlement services for financial markets.
An Export Trading Company (ETC) deals with exports for clients, focusing on all legal requirements and regulations that a company must follow before a country will allow its goods to be exported.