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 I want to accept a tender offer from a stock company?

    I received a tender offer from a company that bought into another company. They are going public with the new company soon. ... Read Answer >>
  2. 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 >>
  3. What happens to the shares of stock purchased in a tender offer?

    Learn what a tender offer is, whether it is a good idea to accept a tender offer and what happens to the shares of stock ... Read Answer >>
  4. How is a tender offer used by an individual, group or company seeking to purchase ...

    Learn how tender offers are used in takeover attempts, and understand the difference between a hostile takeover and a friendly ... Read Answer >>
  5. What usually happens to the price of a stock when a tender offer for shares of the ...

    Learn what happens to the price of a stock when a tender offer is made public. Some of the most contentious takeovers have ... Read Answer >>
  6. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Learn why it may often be in the best interest of a shareholder to accept a tender offer made at a premium to the market ... Read Answer >>
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