Indirect Bidder

AAA

DEFINITION of 'Indirect Bidder'

An entity that purchases Treasury securities at auction through an intermediary, such as a dealer or bank. Indirect bidders include financial institutions, such as foreign central banks, but can also include domestic money managers making bids through primary dealers.

INVESTOPEDIA EXPLAINS 'Indirect Bidder'

The Treasury Department permits indirect bidding on a competitive and a noncompetitive basis. Competitive bids require the direct bidder to specify the desired return, with the dollar amount of securities won at auction depending on the highest competitive discount rate. A noncompetitive bid does not require the bidder to indicate a desired return. The Treasury accepts all noncompetitive bids, and then competitive bids, in order of increasing yield.

After an auction has ended, the Treasury Department announces the dollar amount of securities purchased by primary dealers and other direct bidders, as well as by indirect bidders.

Treasury note purchases by indirect bidders are used as a proxy for investments made by foreign investors. They help the Treasury Department gauge the willingness of foreign banks to continue purchasing Treasury securities. Foreign entities make up a significant portion of the owners of outstanding Treasury securities, so the willingness of these organizations to continue buying securities has a major impact on the ability of the Treasury to raise funds. 

RELATED TERMS
  1. Treasury Direct

    The online market where investors can purchase federal government ...
  2. Central Bank

    The entity responsible for overseeing the monetary system for ...
  3. 30-Year Treasury

    A U.S. Treasury debt obligation that has a maturity of 30 years. ...
  4. 10-Year Treasury Note

    A debt obligation issued by the United States government that ...
  5. Treasury Note

    A marketable U.S. government debt security with a fixed interest ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. Bonds & Fixed Income

    The Treasury And The Federal Reserve

    Find out how these two agencies create policies to stimulate the economy in tough economic times.
  2. Bonds & Fixed Income

    Introduction to Treasury Securities

    Purchasing bonds that are backed by the full faith and credit of the U.S. government can provide steady guaranteed income and peace of mind. Knowing the characteristics of each type of treasury ...
  3. Investing

    Treasury Bills

    Learn more about this government debt obligation and how it can fit into your portfolio.
  4. Personal Finance

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  5. Credit & Loans

    Treasury International Capital

    This important economic indicator can affect interest rates, dollar value and the bond markets.
  6. Bonds & Fixed Income

    Why Didn't Quantitative Easing Lead To Hyperinflation?

    Hyperinflation is an exponential rise in prices and tends to occur not when countries print too much money, but is instead associated with a collapse in the real underlying economy.
  7. Bonds & Fixed Income

    Figuring Out How To Cover Your Liability Bases

    Whenever we talk about the asset-liability approach to portfolio management (ALM), the concepts of immunization and cash flow matching come into play.
  8. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.
  9. Investing

    The Impact Of A Stronger Dollar In The Markets

    The economy continues to improve, but also demonstrated that some areas of the stock market are more vulnerable to an increase in interest rates.
  10. Mutual Funds & ETFs

    4 Tax-Free Muni Bond ETFs to Consider

    Tax free municipal bond ETFs are an excellent way to build wealth slowly. Here are 4 you should consider.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center