bid-to-cover ratio investment & finance definition
In
U.S. Treasury auctions, the ratio between the number of bids received and the
number of bids accepted. The measurement indicates how strong investor demand
is for U.S. Treasuries. The higher the ratio, the stronger the demand.
Typically a ratio over 2.0 is an indicator of a strong auction. A low ratio
indicates weak demand and is said to have a long
tail (a wide spread between the average and the high yield).
See bid-to-cover ratio in Wall Street Words
At an auction of Treasury securities, the dollar amount of money being bid compared with the dollar amount of securities being auctioned. A high ratio indicates strong demand and is likely to strengthen the market prices of other fixed-income securities.