What Does Bid Wanted In Competition (BWIC) Mean?
Bid wanted in competition (BWIC) is a formal request for bids on a package of securities, submitted by an institutional investor to a number of securities dealers. The dealers are being invited to submit bids on the listed securities. Once the bids are in, the institutional investor has a better sense of the current market value of the securities and can then contact the high bidders to finalize a deal.
The BWIC process can be found in sales of bonds and currencies, among other assets.
Bid Wanted In Competition Explained
A bid-wanted announcement may not help a seller obtain the highest possible price for a security. However, the process provides a higher level of privacy for sellers who do not want to immediately divulge that they are making a major change in their financial positions.
- The bid wanted in competition process is used to identify the best market price available for a package of assets.
- Once a price is agreed upon, the seller hands off the securities to a middleman for sale over a set period of time.
- The process is typically used by an institutional investor who doesn't want to immediately reveal a change in strategy.
For the seller, the process concludes with the submission of an order with a predefined spread range to a dealer, and it is up to the dealer to fill that order within a set time span.
BWICs are an increasingly popular 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 process and simultaneously capture a lot of attention if they so choose. Traders and investors can place their highest offers out in the open in an attempt to outbid the competition.
Examples of Bid Wanted in Competition
In 2015, Bloomberg reported a conflict between the Public Sector Pension Investment Board of Canada and the hedge fund Saba Capital Management. The Pension Board sued Saba Capital for allegedly mismarking certain bonds, noting that Saba’s bids-wanted-in-competition (BWIC) process produced bids with depressed prices. The Pension Board accused Saba of doing this intentionally in order to underpay the board. Saba sent out a bid-wanted-in-competition to eight banks, who then disseminated it to their clients. Five out of the eight banks "could not provide any firm bids whatsoever."
In September 2017, Reuters reported that CQS, an electronic stock quotations service, was selling a €200 million portfolio of loans via a Bids Wanted In Competition (BWIC) process. Sources said that bids were due on Sept. 26, 2017. This BWIC entailed 50 names. The average bid was 99.5 percent of face value. Larger positions included the following:
- €8.5 million of HES Beheer (a Dutch ports services company)
- €8.5 million of Schenck Process (a German technology group)
- €8.1 million of Springer (a German publisher)
- €8.3 million of CEP (a French insurance broker)
- €7 million of Median Kliniken (a German rehabilitation clinics group)
- €7 million of a UK cinema operator
- €7 million of Wind (an Italian telecom company)