Bidding is in terms of real yield.
Competitive and noncompetitive bids are awarded at the highest real yield of bids accepted in the auction. The amount of each semiannual interest payment is calculated on the security's inflation-adjusted principal amount on an interest payment date. In the event of sustained deflation, the amount of the semiannual interest payments, the inflation-adjusted principal of the security, and the value of stripped components, would decrease. Interest payments will always be based on the inflation-adjusted principal as of the interest payment date, regardless of whether or not we pay an additional amount to raise the principal amount to par at maturity. In the case of a reopening of an outstanding issue, the denominator is the CPI-U for the original dated date.