In general, it is used for shares, bonds, and other securities.
A ratio above 2.0 indicates a successful auction with aggressive bids.
[3] A lower reading indicates weak demand and is said to have a long tail (a wide spread between the average and the high yield).
[4] For example, suppose debt managers are seeking to raise $10 billion in ten-year notes with a 5.130% coupon, and, in aggregate, they have received seven bids from lenders as follows: The total of all bids received is $19.5 billion, and the number of bids accepted would be $10 billion, therefore leading to a bid-to-cover ratio of 1.95 (calculated by the value method).
Since the managers are interested in raising the cheapest debt possible, bids 1, 2, 3 will be covered in full ($7 billion).