What is a Competitive Bid?

1 ANSWERS

1. Guest6083
   

   Competitive bids are private bids that are provided to an issuer by an underwriter. The terms and conditions associated with the competitive bid are sealed, and therefore only known by the underwriter and the issuer. This process of submitting a sealed bid helps to ensure that the offers received from underwriters are judged on their own merits, and are not the result of negotiations between the issuer and the underwriters.
   
   The competitive bid is normally a process that is open to only a select number of underwriting entities. Essentially, an entity that is about to issue some type of new securities will contact underwriters and invite them to submit sealed bids. Often, the entity will include an outline for the format that is required to participate in the bidding process. This formal request for bids helps to keep the structure of each submitted competitive bid uniform with all other sealed bids that are received.

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