Identifier: C2T3L1 | Revision: 2026-10-26

Decision and objectives

A published Treasury auction yield is used to advertise a customer investment. Determine whether the customer can actually obtain that price and on which value date. Primary issuance supplies financing to the issuer; a secondary trade transfers an existing security between investors. An auction statistic and a dealer's executable customer quote are different evidence.

Objectives: Distinguish issue allocation from secondary purchase; Calculate price-based auction cash; Reconcile an auction result with a later dealer quote.

Prerequisites: C2T2L5.

Mechanics

The issuer announces the security and auction method; bids are submitted through permitted channels under the relevant notice and participation rules. Successful allocation creates payment obligations on the announced value date. Retail access may be through an intermediary's distribution or auction service, subject to its terms. A lesson cannot assume every investor is a direct competitive bidder.

A reopening adds to an existing issue, so maturity and coupon dates can predate the new sale and accrued interest may be due. A new issue and a reopening with similar remaining maturities need not have identical accrued amounts. Secondary quotes also distinguish bid, the dealer's purchase price, and ask, the customer's purchase price.

Price and return drivers

For price-based allocation, clean principal cash = nominal allocated × clean price / 100. Add accrued amount and fees to find the debit. A published weighted average yield describes accepted auction transactions under the stated method; it is not a promise to fill a later customer order at that yield. Allocation size, accepted price and the customer's total costs must be established separately.

Worked case

Hypothetical reopening: customer requests TRY 300,000 nominal through an intermediary, receives TRY 200,000 allocation at clean 96.20 per 100, accrued 1.10 per 100, value date in two stated business days. Gross cash = 200,000 × 97.30 / 100 = TRY 194,600. Add hypothetical intermediary fee TRY 150: required cash TRY 194,750. The unallocated TRY 100,000 nominal creates no security entitlement in this example.

A later same-value-date dealer ask is clean 96.50 with identical accrual and TRY 100 fee. Buying TRY 200,000 nominal then costs 200,000 × 97.60 / 100 + 100 = TRY 195,300. Difference from the allocated auction route is TRY 550. This comparison is valid because nominal, accrual and value date match; different settlement dates would require recalculation.

Adverse case

If the dealer bid immediately after purchase is clean 95.70 and sale fee TRY 100, net sale is 200,000 × (95.70 + 1.10) / 100 − 100 = TRY 193,500. Relative to the auction debit, loss is TRY 1,250. Government issuance does not remove bid-ask or rate risk. If auction allocation is zero, a spending plan cannot assume the intended bond has been acquired; buying later can cost more.

Practical use

Read the actual Treasury notice for auction method, ISIN, coupon/reopening details, bid deadlines and payment instructions. Use HMB issuance material for primary facts and Borsa records or dealer confirmations for secondary prices. The historical HMB report supports the instrument framework, not today's calendar. Confirm the intermediary's authority, customer eligibility, fees and funding cutoff. No current settlement lag or auction access entitlement is asserted by the fictional two-day assumption.

Decision boundaries

Auction averages are useful context, but execution decisions require a firm quote or allocation confirmation. Do not compare a gross auction yield with a net deposit return without aligning dates, costs and taxes. Decline a customer debit that cannot be reconciled to accepted nominal, price, accrual and fees. Where uncertain allocation threatens the cash plan, maintain a liquid fallback rather than assume a full fill.

Practice and references

Exercise: hypothetical allocation TRY 80,000 nominal, clean 99.10, accrued 0.40, fee TRY 60, no financing or tax. Answer: dirty price 99.50; settlement TRY 79,600; total debit TRY 79,660. An advertised 100,000 request is not the calculation base when only 80,000 was allocated.

Takeaway: a published auction outcome, an allocation and a customer execution are three separate records.

Reference guide: domestic-government-bond, dirty-price, Primary market, Reopening, Bid-ask spread.

Next: C2T3L2. Topic test: C2T3.

Primary sources (checked 2026-10-26; changing terms require a publication recheck): Borsa Istanbul announcement amending Debt Securities Market Procedure — 9.1.5; Annex 1; quotation and settlement price distinctions; HMB Public Debt Management Report 2024 — Government Debt Securities; lease certificate definitions; borrowing instruments.

Shared reference guide