Which of the following best describes a ‘when-issued’ market?

Which of the following best describes a ‘when-issued’ market?
A . where members of the syndicate bringing a bond issue to the market are obliged to not undercut the issue price till the first settlement date
B . The when-issued market is one where dealers trade in a security after its price has been set but before the bonds are available for delivery
C . The when-issued market is one where securities are traded on the OTC forward markets prior to their issue
D . The when-issues market is one where the lead manager agreed to buy an entire bond issue at an agreed price, and having done so may sell them onwards to institutional or other investors

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Answer: C

Explanation:

Each of the choices describes various scenarios related to the issue of bonds. A when-issued market is a market in government securities where securities are traded as forward contracts prior to their issue. Choice ‘c’ is the correct answer.

Choice ‘d’ refers to a ‘bought deal’. Choice ‘b’ refers to the ‘grey market’, usually in corporate bonds. Choice ‘a’ refers to a fixed price re-offer mechanism.