In the context of new issues of debt or equity securities, an offering that is under-subscribed is one where investor demand is less than the amount of securities on offer. Underwriters have a number of mechanisms to deal with this. In the worst case, the offering will be cancelled and the issuer will wait for better conditions. Alternatively, pricing can be adjusted downwards to see if that improves demand. In the case of rights issues or sub-underwritten equity issues, underwriters commit to buy any stock not taken up with other investors to take up the slack.


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