Executive Summary:
The Government of India announces the sale/reissue of several Government Stocks via auction to be conducted by the Reserve Bank of India (RBI) in Mumbai on August 3, 2018. Bids must be submitted electronically through the RBI's E-Kuber system, with non-competitive bids due between 10:30 a.m. and 11:30 a.m. and competitive bids between 10:30 a.m. and 12:00 noon. Payment by successful bidders is due on August 6, 2018.
Key Points / Main Content:
Auction Details:
* RBI, Mumbai will conduct the auction on August 3, 2018.
* Bids are to be submitted electronically via RBI's E-Kuber system.
* Non-competitive bids: 10:30 a.m. - 11:30 a.m. on August 3, 2018.
* Competitive bids: 10:30 a.m. - 12:00 noon on August 3, 2018.
* Auction results will be displayed by the RBI in Mumbai on August 3, 2018.
* Payment by successful bidders is due on August 6, 2018.
Government Stock Details:
* The sale/reissue includes the following Government Stocks:
* 6.65 GS 2020 maturing on Apr 09, 2020.
* 7.59 GS 2026 maturing on Jan 11, 2026.
* GoI FRB 2031 maturing on Dec 07, 2031.
* 6.57 GS 2033 maturing on Dec 05, 2033.
* 7.06 GS 2046 maturing on Oct 10, 2046.
* The total notified amount is Rs 12000 Cr.
* GoI has the option to retain additional subscriptions up to Rs 1000 Cr against any one or more securities.
* Stocks are sold as per the terms and conditions in this specific notification and the general notification F.No.42WM2018, dated March 27, 2018.
Allotment to Non-Competitive Bidders:
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions according to the Scheme for Non-competitive Bidding Facility.
Interest and Repayment:
* Interest accrues on the nominal value from the original issue/last coupon payment date and is paid semi-annually.
* Stocks will be repaid at par on the maturity date.
* Accrued interest is included in the payment for the stocks.
* Details of coupon payments and accrued interest dates are provided for each security.
Floating Rate Bond (FRB) Specifics:
* GoI FRB 2031 has a variable interest rate paid semi-annually.
* The coupon rate is based on the Weighted Average Yield (WAY) of the last 3 auctions of 182 Day T-Bills plus a fixed spread of 100 basis points.
* The base rate for the coupon period Jun 7, 2018 to Dec 6, 2018 is 6.79% per annum.
* The rate of interest on FRB 2031 for this period is 7.79% per annum.
When Issued Trading:
* The Stock will be eligible for When Issued trading.
Impact Analysis:
Eligible Individuals and Institutions:
* Impact: Can participate in the auction through non-competitive bidding for up to 5% of the notified amount.
* Action Required: Submit non-competitive bids between 10:30 a.m. and 11:30 a.m. on August 3, 2018, via RBI's E-Kuber system, adhering to the Scheme for Non-competitive Bidding Facility.
Successful Bidders:
* Impact: Will be allotted Government Stocks based on their bids in the auction.
* Action Required: Make payment for the allotted stocks, including accrued interest, by August 6, 2018.
Reserve Bank of India (RBI):
* Impact: Responsible for conducting the auction and displaying the results.
* Action Required: Conduct the auction on August 3, 2018, display results on the same day, and process payments from successful bidders.
Key Entities Referenced
Ministry of Finance: The ministry of the Government of India responsible for financial matters.
Department of Economic Affairs: A department within the Ministry of Finance, Government of India, responsible for economic policy and programs.
Reserve Bank of India: The central bank of India, responsible for conducting auctions for government stocks.
Mumbai, Maharashtra: City in India where the Reserve Bank of India office is located and where the auction results are displayed.
Government Stock: Securities being auctioned by the Government of India.
6.65 GS 2020: A specific government stock with a coupon rate of 6.65% and maturing in 2020.
7.59 GS 2026: A specific government stock with a coupon rate of 7.59% and maturing in 2026.
GoI FRB 2031: A floating rate bond issued by the Government of India maturing in 2031.
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated July 30, 2018
NOTIFICATION
Auction for Sale (Issue/Re-issue) of Government Stock (GS)
F.No.4(6)W&M/2018: Government of India(GoI) hereby notifies sale (issue/re-issue) of the following Government
Stocks:
Date of Tenure Date of Notified Amount
Name of the Security Base Method
Original Issue (yy-mm-dd) Maturity (in ` Crore)
6.65% GS 2020 Apr 09, 2018 02-00-00 Apr 09, 2020 Price Multiple 2000
7.59% GS 2026 Jan 11, 2016 10-00-00 Jan 11, 2026 Price Multiple 2000
GoI FRB 2031 May 07, 2018 13-07-00 Dec 07, 2031 Price Multiple 4000
6.57% GS 2033 Dec 05, 2016 17-00-00 Dec. 05, 2033 Price Multiple 2000
7.06% GS 2046 Oct 10, 2016 30-00-00 Oct 10, 2046 Price Multiple 2000
Subject to the limit of Rs 12000 Cr, being total notified amount, GoI will have the option to retain additional
subscription up to Rs 1000 Cr each against any one or more of the above securities. The sale will be subject to the
terms and conditions spelt out in this notification (called ‘Specific Notification’). The Stock will be sold through Reserve
Bank of India, Mumbai Office, Fort, Mumbai- 400 001 as per the terms and conditions specified in the General
Notification F.No.4(2)–W&M/2018, dated March 27, 2018 issued by Government of India.
Allotment to Non-competitive Bidders
2. The Government Stock up to 5% of the notified amount of the sale will be allotted to eligible individuals and
institutions as per the enclosed Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities
(Annex).
Place and date of auction
3. The auction will be conducted by Reserve Bank of India, Mumbai Office, Fort, Mumbai-400 001 on Aug 03, 2018.
Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-
Kuber) system on Aug 03, 2018. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m.
and the competitive bids should be submitted between 10.30 a.m. and 12.00 noon.
When Issued Trading
4. The Stock will be eligible for “When Issued” trading in accordance with the guidelines issued by the Reserve Bank
of India.
Date of issue and payment for the stock
5. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on Aug 03,
2018. The payment by successful bidders will be on Aug 06, 2018 i.e. the date of issue/re-issue. The payment for the
stocks will include accrued interest on the nominal value of the Stock allotted in the auction from the date of original
issue / last coupon payment date to the date upto which accrued interest is due as mentioned in the table in para 6.
Payment of Interest and Re-payment of Stock
6. Interest will accrue on the nominal value of the Stock from the date of original issue / last coupon payment and
will be paid half yearly. The Stock will be repaid at par on date of maturity.
Date of Coupon
Name of the Coupon rate Date of Last Coupon Date upto which
payments
Security (%) payment accrued interest is due
(month / date)
6.65% GS 2020 6.65 New Stock Aug 05, 2018 Oct 09 and Apr 09
7.59% GS 2026 7.59 Jan 11, 2018 Aug 05, 2018 Jan 11 and July 11
GoI FRB 2031 Variable* Jun 07, 2018 Aug 05, 2018 Dec 07 and Jun 07
6.57% GS 2033 6.57 Jun 05, 2018 Aug 05, 2018 Dec 05 and Jun 05
7.06% GS 2046 7.06 April 10, 2018 Aug 05, 2018 Oct 10 and Apr 10
* GoI FRB 2031
(i) The interest at a variable rate will be paid every half-yearly.
(ii) The Floating Rate Bond will carry the coupon, which will have a base rate, equivalent to Weighted Average Yield
(WAY) of last 3 auctions (from the rate fixing day) of 182 Day T-Bills plus a fixed spread, of 100 basis points as
decided by way of auction mechanism. The spread will be fixed throughout the tenure of the bond. The implicit yields
will be computed by reckoning 365 days in a year.
(iii) In the event of Government of India 182-day Treasury Bill auctions being discontinued during the currency of the
Bonds, the base rate of the coupon will be the average of Yield to Maturity (YTM) rates prevailing for six month
Government of India Security/ies as on the last three non-reporting Fridays prior to the commencement of the semi-
annual coupon period. In case particular Friday/s is/are holiday/s, the yield to maturity rates as on the previous
working day shall be taken.(iv) The base rate for the coupon period Jun 7, 2018 to Dec 6, 2018 is 6.79% per annum. Accordingly, the rate of
interest on FRB 2031 for this period shall be 7.79% per annum. The rate of interest payable half yearly on the Bonds
during the subsequent years shall be announced by the Reserve Bank of India before the commencement of the
relative semi-annual coupon period
By Order of the President of India
(Arvind Shrivastava)
Joint Secretary to the Government of India