Bid-to-Cover Ratio Definition

Dictionary of Financial Terms

This is the key measure of demand in an auction of Treasury bills, notes or bonds. It compares the volume of securities that dealers enter bids for to the volume offered for sale. For example, if the Treasury offers $10 billion of securities for sale and dealers enter bids for a total of $20 billion, the auction produces a bid-to-cover ratio of 2.

An auction is judged successful if it produces a bid-to-cover ratio significantly higher than the average bid-to-cover ratio for the previous dozen auctions of securities of that type.

Definitions of Financial Terms