Workable Indication

A workable indication is a non‑binding price quote, usually expressed as a range, that a dealer or broker provides when buying or selling a specific bond—most commonly in the municipal (muni) bond market. It serves as an estimate or starting point for negotiation rather than a firm commitment.

Key takeaways

• A workable indication is a nominal, non‑binding quote given as a range for buying or selling a bond.
• It differs from a firm quote, which obliges the dealer if accepted.
• Workable indications are typically one‑sided (either a bid or an ask).
• They are common in the slower, secondary muni bond market and help gauge investor interest or locate hard‑to‑find issues.

How it works

Dealers use workable indications to signal the price at which they might buy or sell a particular bond without committing to trade at that price. Because municipal bonds are often quoted on a yield‑to‑maturity basis rather than a dollar price, a dealer might say a bond would yield “around 3.50%,” indicating the approximate price that would produce that yield.

Contrast:
* Firm quote (bona fide quote): binding if accepted.
Firm‑with‑recall (out‑firm): temporarily binding for a short window (often about an hour).
Workable indication: non‑binding and flexible.

Why dealers issue them

• To provide a negotiating starting point when they’re gauging demand.
• To allow flexibility while locating a specific bond or confirming market conditions.
• To let sellers assess how different price levels affect buyer interest.
  Dealers often use vague language (e.g., “somewhere in the neighborhood of…”) to emphasize the tentative nature of the quote.

Market context and special considerations

The muni bond secondary market is generally less fast‑paced than equity markets. Participants—institutions and retail investors alike—have time to negotiate and consider offers, making workable indications a practical tool. However, competition can develop quickly if another buyer expresses interest, forcing bidders to act more decisively or revise offers.

Summary

A workable indication is a flexible, non‑binding price range used primarily in the municipal bond market to initiate negotiations or signal interest. It helps dealers and buyers explore potential trades without creating an obligation to transact at the quoted figures.