General information about government bond auctions
The central government's auctions are conducted through the MTS Denmark auction system with the primary dealers as counterparties. Investors can place bids at the auctions through primary dealers. The auction procedure can be summarised in four steps:
1. Announcement of auction calendar
An auction calendar with preliminary auction dates for the next three months is published regularly. Auctions are announced via the DN News and published at the Auction Calendar. The auctions depend on stable market conditions.
2. Choice of government securities for auction
The government bond(s) to be auctioned will be announced no later than three trading days prior to the auction. The choice of bond(s) for auction will be based on the issuance strategy. Investor demand for the various maturity segments is also taken into account. For current information on investor demand for the various maturity segments, the central government's primary dealers are consulted.
3. Pricing, bids and allotment
The auction principle is uniform pricing. This means that bids at the cut-off price or above are met at the cut-off price. Securities can be allotted pro rata to bids at the cut-off price, entailing that all investors with bids at the cut-off price are allotted the same share of their bids. It should be noted that an auction can be completed without allotment.
Each primary dealer may place an arbitrary number of bids. The deadline for submitting bids on the auction day is typically 10:15 a.m. A cut-off price is then fixed and announced within 10 minutes. On average, the cut-off price was announced after three minutes in 2013.
4. Announcement of auction results
When the auction has been completed, the auction results are announced via DN News and published under Auction Results.