I’m trying to understand how the bond primary market works and have following questions, I’d appreciate if you could help me understand
Are bonds issued first-come-first-served or given to the highest bidder?
A company or government is presumably trying to raise to fixed amount of money. Suppose they want to raise $100,000 and sell 1000 bonds at $100 each. When the bond opens for sale, if one person buys all 1000 bonds, then is the bond now closed for sale on the primary market?
What if nobody or too few people buy a bond?
Take the previous example. What if after one week, only 500 of the 1000 bonds have been purchased. What does the company/government do now? Do the people owning the 500 bonds get their money back?
How long are bonds listed for sale?
If a company wants to raise money, they probably need the money immediately. How long would/can the company wait to sell the 1000 bonds?
Is there any way to check how many of the total units available for sale have been sold? Coin doesn’t seem to have this information.
When it comes to a Bond, there is no question of highest bidder. Yes there could be one person asking to buy the entire bonds. In the hypothetical example given by you. In case only one investor wants to buy the entire lot, he can do so if the issuing company agrees to. Generally it is not considered great to issue the entire bond to one person (bad press) The issuing company will be doing a great deal of KYC on the investor as to why only he wants the entire bond. Practically, never heard of one investor buying the entire bond of good companies. This may happen in smaller and not well known company.
It is upto the issuing company. They can accept what has been subscribed by reducing the bond limit or cancel the entire bond issue and return the money to people who have invested.
Normally before the bonds are issued, there will be book runners/underwriters who would have undertaken to subscribe for the bonds in case the bonds were not fully subscribed. In such case the underwriters will have to buy the unsold portion.
Every bond issue will have a end date. It is on this date that the actual allocation of bonds happen to investors.
I am sure there will be a press release regarding the same. Not sure any broker will be in a position to tell you during the bond issuance stage the % of bonds that has been subscribed unlike IPO where on a daily basis you get update. (This is my understanding not sure)
Disclaimer: all of the above are from my limited knowledge, E&OE
Similar to a stock IPO, during a bond IPO, i.e. when a bond is initially opened for subscription,
the exchanges (BSE, NSE) publish end of day updates
on subscription volume / % across various categories (Individuals, HNIs, Mutual-Fund houses, …)