An option for retaining oversubscription is said to have originated following an issue by the Green Shoe Manufacturing Company founded in 1919. For the first time, it reportedly introduced a clause for overallotment of the securities it was offering to the public. This ‘green shoe’ option has subsequently been used as a measure to mop up extra capital by selling additional securities, equity or debt when demand is greater than expected.
A 100 years later, 2019 has seen a number of debt issuances exhibiting a phenomenon where the provision for oversubscription outstrips the base issue. In other words, the mechanism