Bid-to-Cover Ratio


DEFINITION of 'Bid-to-Cover Ratio'

A ratio that compares the number of bids received in a Treasury security auction to the number of bids accepted. The bid-to-cover ratio is an indicator of the strength or demand for a Treasury offering relative to investor bids deemed suitable in the auction process. A higher ratio would be an indication of a strong or "bought" auction.

BREAKING DOWN 'Bid-to-Cover Ratio'

For example, a ratio above 2.0 indicates a successful auction comprised of aggressive bids. On the other hand, a low ratio is an indication of a disappointing auction, marked by a wide bid-ask spread. In such a scenario, investor demand for Treasury securities at anticipated rates is below expectation, which could lead to an underbought issue if the ratio falls below 1.0.

  1. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
  3. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
  4. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  5. Bid-Ask Spread

    The amount by which the ask price exceeds the bid. This is essentially ...
  6. Contagion

    The spread of market changes or disturbances from one region ...
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