What Is a Bid Wanted In Competition (BWIC)?
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.
- 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.
How Bid Wanted In Competition (BWIC) Works
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.
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
Park Square put a €416m-equivalent loan and bond portfolio on the secondary market via BWIC in 2019—one of the biggest ever to hit the BWIC 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)—announced plans to automate the BWIC process. The companies are working on technology that will speed up the BWIC process and do away with manually complaining bid lists. The idea is to create a central place where data on the collateralized-loan obligation (CLO) market is compiled.
This will bring electrification to the CLO market and address the increased demand for CLOs following the financial crisis. Time spent compiling BWIC lists could be reduced by 80%, per Citi and Bank of America. The move will also allow banks to gain more trading volume for these auctions.