Auction procedures

    Auction procedures

    All T-bond and T-bill sale auctions are carried out in uniform price formula.
    Till the end of 2011 auctions of TS were held in the multiple-price auction system i.e., each of the bidders bought securities at a price submitted in his bid. 

    In the case of uniform price auction all successful bidders pay for purchased securities the uniform price equal to the minimum accepted price. Buy-back auctions are conducted according to previous rules.

    Investors may place non-competitive bids on T-bond and T-bill sale auctions. Non-competitive bids are the purchase declarations where investors only determine the number of securities they intend to buy without giving their price. Investors placing this kind of bids pay for the purchased securities price equal to the minimum price set at the given auction. The predicted share of non-competitive bids in the total sales value on a given auction is 15%.

    Bids are submitted by PDs to the National Bank of Poland by 11:00 a.m. on the auction date. Upon receipt a bid summary from the NBP the Minister of Finance takes a decision on accepted minimum price for TS with given maturity. Bids with higher price are accepted in whole while bids presenting accepted minimum price can be accepted with a reduction or in whole.
    Starting from October 1st, 2013 rule of rounding reduced bids was introduced - reduced bids are rounded up to the nearest multiple of 1000 in case of T-bonds and 10 in case of T-bills. The number of securities in every bid after reduction and rounding can not be greater than the number of securities specified in the offer. Rounding rule applies to all reduced bids at sale, supplementary, switching and buy-back auctions. Auction participants are allowed to place ONE non-competitive bid on a given auction (applies also to bids on supplementary auction).

    The Minister of Finance may, no later than the on the following day, organize a non-competitive auction of TS with offer not exceeding 20% of initial auction offer. All PDs and BGK may participate in non-competitive auction. Bids of non-competitive auction participants, who did not purchased TS on sale auction, are accepted in the second instance after full satisfaction of the demand of bidders who bought TS on sale auction. At non-competitive auctions TS are sold at minimum price determined at sale auction.
    Schedule of TS sale and non-competitive auction is presented in the table below.

      T-bonds T-bills
      SALE AUCTION
    Issue agent National Bank of Poland
    Auction participants PDs + BGK
    Auction format Single-price auction - each of the bidders buys securities at a minimum price accepted at auction. 
    Publication of information on auction Day T-2, time 15:00 Day T-1, time 15:00
    Deadline for placing bids Day T, time 11:00 Day T, time 11:00
    Minimum bid face value 1.000.000 PLN 100.000 PLN
    Publication of information on auction results Day T, time 11:30 Day T, time 11:30
    Auction settlement 1) Day T+2, time 12:30 Day T+2, time 14:00
      NON-COMPETITIVE AUCTION
    Issue agent National Bank of Poland
    Auction participants 2) PDs + BGK
    Auction format Single-price auction - each of the bidders buys TS at minimum price determined at sale auction.
    Publication of information on auction Day T, time 12:30
    Deadline for placing bids Day T, time 13:30
    Publication of information on auction results Day T, time 13:45
    Auction settlement Day T+2, time 12:30 Day T+2, time 14:00

    1) Payment for the TS sold through auction is usually made two days after an auction but under reasonable circumstances may be set on other day.
    2) Bids of non-competitive participants, who did not purchased TS on sale auction, are accepted in the second instance after full satisfaction of the demand of bidders who bought TS on sale auction. 

    Treasury bond switching auction.
    At switching auction the Minister of Finance buys back bonds with near redemption dates before their maturity date, while the settlement of the transaction is effected by giving the bondholder new bonds of a different series. Bought-back securities are cancelled. The operation is conducted without cash flows. The Minister's of Finance goals of such an operation include:

    • reduction of debt refinancing risk,
    • increase in the value of benchmark issues of bonds,
    • closing of small and with low liquidity issues of marketable and non-marketable bonds,
    • managing the interest rate risk.

    Starting from October 1st, 2013 modifications to the switching auctions were implemented, including:

    1. introduction of uniform price formula on T-bond switching auctions.  MoF determines the minimum price of T-bonds sold in each pair, which is a settlement price for all accepted bids.

    2. introduction of the possibility of placing non-competitive bids on T-bond switching auctions. Auction participant may place ONE non-competitive bid, determining amount of bought-back bonds without giving price of settlement bonds. The share of non-competitive bids in the total buy-back value will be announced in the information on given auction according to the similar rules as in the case of sale auctions (currently stands at 15%).

    3. introduction of the possibility of T-bonds' cash purchase after switching auction. Auction participants who have purchased bonds on switching auction are entitled to purchase additional bonds in number representing the difference between the sum of the purchased securities of a given series and its rounding up to the nearest multiple of 1000.

    Schedule of T-bonds switching auction in day T is presented in the table below.

    SWITCHING AUCTION
    Issue agent National Bank of Poland
    Auction participants   PDs + BGK
    Auction format Uniform-price auction - MoF determines the minimum price of T-bonds sold in each pair, which is a settlement price for all accepted bids.
    Publication of information auction Day „T-2", time 15:00
    Publication of information on switching prices Day „T-1", time 15:00
    Deadline for placing bids Day „T", time 11:00
    Minimum bid face value 1.000.000 PLN
    Publication of information on auction results Day „T", time 12:00
    Deadline for cash purchase bids approval Day „T", time 12:15
    Publication of information on cash purchase results Day „T", time 12:30
    Auction settlement 1) Day „T+2", time 12:30
    1) Auction settlement is usually made two days after an auction but under reasonable circumstances may be set on other day.

     

© Copyrights Ministerstwo Finansów 2011 - 2017 Move up