Bid Wanted In Competition (BWIC)

What Is a Bid Wanted In Competition (BWIC)?

Bid wanted in competition (BWIC) is a proper request for bids on a package of securities, presented by a institutional investor to a number of securities dealers. The dealers are being welcome to submit bids on the listed securities. When the bids are in, the institutional investor has a better feeling of the current market value of the securities and can then contact the high bidders to conclude a deal. The BWIC cycle can be found in sales of bonds and currencies, among different assets.

How Bid Wanted In Competition (BWIC) Works

A bid-wanted announcement may not assist a seller with getting the highest conceivable price for a security. In any case, the cycle gives a higher level of privacy for sellers who would rather not quickly unveil that they are rolling out a major improvement in their financial positions.

For the seller, the cycle closes with the submission of an order with a predefined spread reach to a dealer, and it depends on the dealer to take care of that request inside a set stretch of time.

BWICs are an inexorably famous method for investors to offload assets and free up cash. The goal is generally to reinvest the proceeds in new primary market deals. Sellers can exit positions in the auction cycle and at the same time capture a ton of consideration in the event that they so decide. Traders and investors can place their highest proposals out in the open trying to outbid the competition.

Instances of Bid Wanted in Competition

Park Square put a \u20ac416m-identical loan and bond portfolio on the secondary market by means of BWIC in 2019 — one of the greatest ever to stir things up around town market. Park Square's BWIC included 46 names, including Terreal, Springer, Verisure, and Kronos.

Last year (2021), major banks — Citi (C) and Bank of America (BAC) — declared plans to mechanize the BWIC interaction. The companies are working on technology that will speed up the BWIC interaction and get rid of physically whining bid records. The thought is to make a central place where data on the collateralized-loan obligation (CLO) market is gathered.

This will carry jolt to the CLO market and address the increased demand for CLOs following the financial crisis. Time spent arranging BWIC records could be diminished by 80%, per Citi and Bank of America. The move will likewise permit banks to gain really trading volume for these auctions.

Highlights

• When a price is agreed upon, the seller hands off the securities to a middleman available to be purchased over a set period of time.
• The bid wanted in competition process is utilized to distinguish the best market price that anyone could hope to find for a package of assets.
• The cycle is regularly utilized by an institutional investor who would rather not quickly uncover a change in strategy.