Competitive Tender

DEFINITION of 'Competitive Tender'

An auction process through which large institutional investors (also called primary distributors) purchase newly issued government debt. The competitive tender process awards securities to the highest bidders; all bids must be submitted by a predetermined date and must be for a minimum of $100,000. Competitive tender is one of two bidding processes for buying new government securities in the primary market (directly from the government).


Also called competitive bidding.

BREAKING DOWN 'Competitive Tender'

The other bidding process for buying government securities is non-competitive tender. The U.S. Treasury primarily uses non-competitive tender, while Canada's central bank, the Bank of Canada, primarily uses competitive tender (but also accepts non-competitive bids). Those who receive securities in the competitive tender process may then choose to sell them on the secondary market. Primary distributors may also choose to bid on behalf of smaller customers.

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RELATED FAQS
  1. Why would it be in the interest of shareholders to accept a tender offer?

    Learn when it is in the best interests of shareholders to accept a tender offer. A tender offer is a bid to buy a large portion ... Read Answer >>
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  3. If a company offers a buyback of its shares, how do I decide whether to accept the ...

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