US Treasury Auctions

US Treasury Auctions: Quick Facts to Know before the Next Announcement

The Treasury Department of the US Government conducts 300+ public auctions in US and Puerto Rico every year to sell out securities and forfeited properties subject to issues like the Internal Revenue Service tax dues or violation of the federal laws. In this guide to the US treasury auction, get to know how these auctions work, where to find these announcements and much more including what are the prospects to take advantage of during these ongoing auctions.

The U.S Treasury announces public auctions for the individual and institutional investors for selling bills, bonds, Treasury Inflation-Protected Securities (TIPS), Floating Rate Notes (FRNs) and others for financing Federal Government debt. The properties on auction also include a range of merchandize including real estate, vehicles, airplanes, boats, industrial and electronic equipments, jewelry, apparels etc.

Different US Government Agencies Hosting Auctions

  1. Internal Revenue Service (IRS)- Puts forth real and personal properties on sale including real estate, automobiles, commercial and industrial equipments/supplies etc
  2. Treasury Executive Office for Asset Forfeiture (TEOAF) – Arranges auctioning for properties forfeited or seized subject to Federal law (enforced by the Department of Treasury and Department of Homeland Security, US Govt.) violations. The properties include general properties, real estate, airplanes, boats, vehicles and others.
  3. U.S. Department of Housing and Urban Development (HUD)
  4. Federal Deposit Insurance Corporation (FDIC)

How do the Treasury Auctions Work

The auctioning procedures may vary depending on the agency conducting the event but in general, the entire event is conducted in systematic order.

  1. Public Announcements : The US Department of Treasury releases public announcements with the following details about the auction:
  • Amount of security put on sale by the treasury
  • Information about the Auction
  • Date of Auction
  • Date of Issuance
  • Date of Maturity
  • Eligibility criteria for participation
  • Terms and conditions
  • Bidding closure times for competitive and noncompetitive bids
  1. Bidding Event : Upon the release of the announcement, the interested individuals and institutes can place their bids through Treasury Automated Auction Processing System (TAAPS) or website. The participants may choose to place their bids in any of the two types depending on their suitability to the terms and conditions:
  • Non-Competitive Bids : The amount of securities for non-competitive bids is limited to $5 million per auction and generally submitted by small individual and institutional investors.
  • Competitive Bids : The bidders from large financial organizations or their clients generally submit competitive bids and are limited to receive up to 35% of the total amount of securities put on the auction.
  1. Winning Bids and Issuance : All bids submitted within the last date of submission will be considered for evaluation by TAAPS through electronic processing to determine the winning price for each auction. Depending on the evaluation process, the Department of Treasury delivers the securities on the date of issue to the winning bidders.

Things to Remember When Participating in Government Auctions

Like any auction event, the bidder coming up with the highest bid amount at the US treasury auction wins. Before placing your bid, here are some helpful tips to follow during the event.

  • In most of the cases, if you win the bid, there are no provisions for cancellation. If you are doubtful about the decision-making, check for the cancellation policies, terms and conditions in advance.
  • The mode of payment for buying the items on auction may differ depending on the agency or the associated company handling the sales. Cashier’s checks, personal checks, credit cards are some widely accepted payment forms.
  • When bidding for real estate auctions, find out the financing options or any broker with whom to work out through the bidding and purchase formalities. For some real estate auctions, financing may not be available. For such events, the winning bidder must be prepared to pay the amount in full to complete the sales process.

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