Trading
Premium or discount to trust
The difference between the market price and the trust per share, expressed as a percentage.
Also written: spread to trust, discount to trust, premium to trust
A SPAC trading below its trust per share is at a discount: a buyer who holds to the redemption date collects the gap, plus whatever the trust earns in the meantime, provided the vehicle does not do something that impairs the trust.
A SPAC trading above trust is at a premium. The market is paying for the announced or expected combination, and that premium is what is at risk if the deal fails.
Why it matters
Most pre-deal SPACs trade within a whisker of trust. A wide spread is either a genuine opportunity or a sign that one of the two inputs is stale, which is worth checking before acting on it.
Related terms
Trust per share
The trust balance divided by the public shares outstanding, which is the amount a redeeming holder receives.
Redemption
A public shareholder's right to hand back shares for their pro-rata share of the trust, exercisable at a vote.
SPAC arbitrage
Buying pre-deal SPACs below trust value to collect the spread and the interest, with redemption as the exit.
See the term in the wild: the screener shows trust size, per-share value and deadlines for every U.S. SPAC, and each profile links to the filings the numbers came from.
Definitions describe market practice and are not investment, legal or tax advice.