When-Issued

When-issued (WI) trading refers to transactions in a Treasury security that has been announced but not yet settled. It establishes the market's consensus yield before the auction takes place.

When a new Treasury issue is announced (typically several days before the auction), dealers begin trading it on a "when, as, and if issued" basis. The when-issued yield:

• Provides a fair value benchmark against which the auction result is measured
• Determines the tail: the difference between the auction stop and the WI yield
• Allows investors to pre-position before the auction, locking in yields or hedging exposures

When-issued trading serves an important price discovery function:

• It aggregates information from across the market about the likely clearing yield
• It reduces uncertainty at the auction itself, as bidders can reference the WI market
• It facilitates the distribution process, since dealers can pre-sell to customers at WI levels

The when-issued market is most active in the hours leading up to the auction. The "1:00 PM level" (just before the typical 1:00 PM ET auction cutoff) is the standard reference point for calculating the tail.

When-issued trading carries settlement risk — if the auction doesn't proceed or terms change, WI trades may be canceled. In practice, this risk is negligible for standard Treasury auctions.