What Does “When Issued” Mean?
A transaction conducted conditionally because security has been approved but not issued is known as a “when issued” (WI) transaction and traded on a when-issued basis, including Treasury securities, stock splits, and newly published stocks and bonds. Underwriters approach prospective investors who may want to place an order to buy a piece of a new issue before the latest issue is offered.
Recognizing When Printed
Orders given on a conditional basis are made since they may not be fulfilled, especially if the offering is discontinued. When issued, orders are sometimes referred to as orders “with ice” or orders “when distributed.” This abbreviation stands for “when, as, and if issued.”
When securities are announced but not yet issued, they trade on a when-issued basis. Only once the security is given is the transaction concluded. When-issued instruments are exchanged on a when-issued market.
When-issued markets may indicate the potential degree of investor demand for a fresh issuance. The absolute security is issued, and the exchanges or the National Association of Securities Dealers’ decision that the transaction has been resolved determines when a transaction is issued.
Illustration of When Issued
A large company has decided to split off its chemicals sector because of the poor margins and effect on profitability. The conglomerate intends to distribute shares of the new chemicals division firm to its shareholders as a dividend to carry out the spinoff.
The conglomerate’s shareholders may effectively start trading the right to receive shares in the spinoff on a when-issued basis after the record date, which is the day on which holders of the conglomerate’s equity are entitled to receive stock in the spinoff.
Shareholders who purchase the rights but do not own conglomerate shares on the distribution date—the day the spinoff’s actual shares are issued and put on the market—receive their spinoff shares, and the when-issued market closes.
Advantages of Printing
When securities are released, they reveal their demand level, which may attract investors who otherwise avoid the bidding process out of concern about a turbulent market. Because investors are confident in the demand for the securities in question, it may reduce volatility when issued.
When issued, a new security market is developed by drawing investors, and it also provides investors with liquidity before the deposits are distributed, making it easier for them to liquidate their financial assets.
Conclusion
- When issued (WI) refers to a conditional transaction in which the security has been approved but not issued.
- I traded on a when-issued basis, including Treasury securities, stock splits, and newly issued stocks and bonds.
- Orders given under condition are made because they may not be fulfilled, especially if the offering is discontinued.
- When-issued markets may provide an idea of the potential demand for a fresh issuance.
