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.

  1. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  2. Tender

    To invite bids for a project, or to accept a formal offer such ...
  3. Non-Competitive Tender

    One of the two bid processes for buying debt issuances. Non-competitive ...
  4. Primary Market

    A market that issues new securities on an exchange. Companies, ...
  5. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
  6. Bank Of Canada - BOC

    The central bank of Canada, that came into existence after the ...
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