Bid-to-cover Ratio in Government Bond Auction

Bid-to-cover (BTC) ratio is the term that is often encountered when discussing about the government bond and sukuk issuance which is how the government bond is issued in Malaysia. You can read more about Malaysia government bond HERE.

For example, in BIX Malaysia 4Q20 report on the Government Bond Auction in Malaysia, it states that the average of bid-to-cover ratio received by the local government bond, MGS and GII was at 2.113x , meaning the bids or offer prices received is 2.113 times higher than the amount of the bonds being auctioned during the quarter. The BTC ratio is also being mentioned in the US Treasuries auction result.

References:

1. Securities Commission Malaysia (2009). Malaysian Debt Securities and Sukuk Market: A guide for Issuers and Investors. Retrieved from https://www.sc.com.my/api/documentms/download.ashx?id=9b218a7d-9ce0-47e6-a2e1-2ee38bad11b1
2. Bond Info Hub. Retrieved from https://bondinfo.bnm.gov.my/
3. Treasury Direct. How Treasury Auctions Work. Retrieved from https://www.treasurydirect.gov/instit/auctfund/work/work.htm
4. Federal Reserve Bank of New York (February 2005). The Treasury Auction Process: Objectives, Structure, and Recent Adaptations. Retrieved from https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci11-2.html

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