Noncompetitive bidders pay the average price established by the competitive bidders. This is the method used most frequently to float notes and bonds. Neither the price nor the coupon rate on the new securities is set in advance by the Treasury. Instead, it merely announces the amount of securities available and calls for yield bids. All successful competitive bidders receive their bid yield.
Noncompetitive bidders receive the average yield established by the competitive bidders.
In order to secure informal underwriting, pricing must be attractive to the market. When pricing is attractive, most of the underwriting support is given by government securities dealers, who account for about two-fifths of the market for new issues. Some new issues can be paid for with simultaneously maturing issues. This means that the cyclically issued bills and notes held by smaller buyers are rolled over with a minimum of disturbance in the markets. Types of Bids Competitive bids are typically submitted by large buyers, including commercial banks and government securities dealers, who buy several million dollars worth at one time.