A competitive sale is a method of selling bonds where the Issuer offers a debt issue for sale at a specific date and time and awards the bonds to the bidder with the lowest True Interest Cost (TIC). The prime benefit of this method of sale is that it results in the best interest rate available from the entire market by allowing all eligible underwriters the opportunity to bid on the bonds. Because different bond underwriters have varying, and evolving views of future interest rates and economic conditions, a competitive sale typically results in bids that can be as close as 0.01% from the winner to second-place, and often with spreads of over 1.00% to the last place bids.
Article originally published in the Ohio GFOA April 2020 Newsletter