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.

RELATED TERMS
  1. Non-Competitive Tender

    One of the two bid processes for buying debt issuances. Non-competitive ...
  2. Hedged Tender

    A strategy in a tender offer where an investor short sells a ...
  3. Proration

    A situation during a corporate action in which the available ...
  4. Tender

    To invite bids for a project, or to accept a formal offer such ...
  5. Legal Tender

    Any official medium of payment recognized by law that can be ...
  6. Creeping Tender Offer

    A takeover strategy involving the gradual acquisition of the ...
Related Articles
  1. Investing Basics

    How Does a Tender Work?

    Tender usually refers to the process in which governments invite suppliers to bid for the right to work on large projects.
  2. Investing Basics

    Explaining Tender Offers

    A tender offer is a broad public offer made by a person or company to purchase all or a portion of the shares of a publicly traded company.
  3. A. Introduction: Securities Industries Rules and Regulations

    Federal and state securities laws, as well as industry regulations, have been enacted to ensure that all industry participants adhere to a high standard of just and equitable trade practices. ...
  4. Stock Analysis

    3 Benefits of a Successful Tender Offer: Cliffs Natural (CLF)

    Learn about the potential benefits that the debt tender offer by Cliffs Natural Resources had for the company's balance sheet and income statement.
  5. Investing

    What's a T Bond?

    Treasury bonds, or T-bonds, are marketable securities issued by the US government, and are available in increments of $100. Bonds have a maturity range of ten to 30 years, with 30 being the most ...
  6. Active Trading

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  7. Term

    Negotiating the Bid

    A bid is an offer investors make to buy a security.
  8. Professionals

    Types Of Government Securities

    Series EE Bonds: The series EE bonds are commonly known as savings bonds. They are purchased directly from the US government at a discount from their face value, typically 50%. The Series EE ...
  9. Options & Futures

    Mergers and Acquisitions: Doing The Deal

    Start with an Offer When the CEO and top managers of a company decide that they want to do a merger or acquisition, they start with a tender offer. The process typically begins with the acquiring ...
  10. Professionals

    Awarding The Issue

    There are two ways in which the corporation may select an underwriter. A corporation may elect to have multiple underwriters submit bids and choose the underwriter with the best bid. This is ...
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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What is the difference between fiat money and legal tender?

    Learn more about fiat currency and legal tender. Find out how these terms are used by economists to describe different types ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center