What is the recommended minimum number of bids to receive for a competitive interest rate?

The recommended minimum number of bids to receive for a competitive interest rate is three because having at least this number helps ensure a more competitive and transparent process. When an issuer receives multiple bids, it can compare the interest rates and terms offered, which fosters competition among potential investors. This competition typically leads to more favorable borrowing costs, as bidders will present their best offers to secure the deal.

If only one or two bids are received, there is a higher risk that the issuer may not get the best possible interest rate, as there is less competition to drive down the rates. Additionally, having three or more bids allows for better flexibility in negotiations and can provide a clearer picture of market conditions, further aiding in making an informed decision about which offer to accept. Thus, three bids are often seen as the minimum threshold to ensure a fair and competitive bidding environment.