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Finance allah shmoop what is the bid to cover ratio

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doesn't have to do with how much of the blanket

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your loved one leaves you at night No that's bed

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to cover ratio Totally different We're talking about a sentiment

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index as it relates to us treasury bill auctions and

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the overall health of the u s economy As you

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hopefully remember us treasury securities air sold at a discount

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to par pay no interest along the way and then

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just pay full par at the end That is a

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bid for a six month t bill might be a

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nine hundred eighty eight dollars and twenty cents for a

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piece of paper paying a thousand bucks in six months

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We'll have the government come up with that nine hundred

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eighty eight twenty number Was it from an act of

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congress a mandate from the prez of bill no it

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was set by bids from investors hoping to be ableto

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buy that grand payable in six months for as cheap

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a price as possible But once that bid number is

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set well then the government decides it wants to sell

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me x dollars worth of that particular security and the

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price is set The government hopes that there are buyers

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or bitters for that security paying some in two ish

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percent and change an annualized returns Well if there are

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tons of bidders at two percent it signals to the

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government that next week well it can probably offer just

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one point eight percent for that same paper all else

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being equal and you know then they can raise as

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much money as they want at that point Well if

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there are scant few bidders well then it signals to

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the g men that they might have to raise the

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rent they pay on the money they're willing to borrow

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here A two point once before do two point three

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percent or something like that So the bid teo cover

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ratio is the number of bids made divided by the

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number of bids accepted or covered and it's a carefully

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tracked number because it conveys a lot of market intelligence

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about investor demand for us paper and you know generally

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how healthy things are So to recap bid to cover

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ratio bed to cover ratio on this would be a 00:02:08.09 --> [endTime] bed couch ratio

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