Executive Summary:
The Government of India announces the sale/reissue of Floating Rate Bonds 2024 for an aggregate amount of 3,000 crore nominal via auction conducted by the Reserve Bank of India (RBI). The auction will be held on June 30, 2017, with payment due on July 3, 2017. These bonds have an eight-year tenure and will be repaid on November 07, 2024.
Key Points / Main Content:
* **General Information:**
* The sale/reissue pertains to Government of India Floating Rate Bonds 2024.
* The aggregate amount for sale is 3,000 crore nominal.
* The sale is subject to the terms and conditions outlined in this notification and the General Notification F. No. 4(13)WM2008, dated October 8, 2008.
* **Auction Details:**
* The Bonds will be sold through the Reserve Bank of India (RBI), Mumbai Office, via a price-based auction using a multiple price auction method.
* Up to 5% of the notified amount will be allotted to eligible non-competitive bidders.
* The auction will be conducted by RBI, Mumbai on June 30, 2017.
* Bids are to be submitted electronically on the RBI's e-Kuber system on June 30, 2017.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* **Bond Features:**
* The Bonds have an eight-year tenure, commencing from November 07, 2016, and repayable on November 07, 2024.
* The payment date for successful bidders is July 3, 2017, which includes accrued interest from May 07, 2017 to July 2, 2017.
* Interest will be paid every half-yearly on November 07 and May 07 at a variable rate.
* The variable coupon rate will be based on the average yield of the last three auctions of 182-day Treasury Bills.
* If 182-day Treasury Bill auctions are discontinued, the coupon rate will be based on the average Yield to Maturity (YTM) rates for six-month Government of India Securities.
* The RBI will announce the interest rate before the commencement of each semi-annual coupon period.
* **Trading:**
* The Stock will be eligible for When Issued trading as per RBI guidelines.
Impact Analysis:
**Successful Bidders:**
* *Impact:* Obligation to pay for the allotted stock by July 3, 2017, including accrued interest. Entitlement to receive variable interest payments every half-year.
* *Action Required:* Ensure funds are available for payment by July 3, 2017. Monitor announcements by RBI regarding interest rates.
**Reserve Bank of India (RBI):**
* *Impact:* Responsible for conducting the auction, displaying results, and announcing interest rates.
* *Action Required:* Conduct the auction on June 30, 2017. Display auction results. Announce interest rates before each semi-annual coupon period.
**Non-Competitive Bidders:**
* *Impact:* Allotment of bonds up to 5% of the notified amount, subject to eligibility under the Scheme for Non-competitive Bidding Facility.
* *Action Required:* Submit bids between 10.30 a.m. and 11.30 a.m. on June 30, 2017, if eligible and interested.
Key Entities Referenced
Government of India Floating Rate Bonds 2024: The specific type of bonds being offered for sale/reissue in this notification.
Reserve Bank of India: The central bank of India, responsible for conducting the auction and displaying results.
Mumbai, Maharashtra: The city in which the Reserve Bank of India office that is conducting the auction is located.
General Notification F. No. 4 13WM2008: A pre-existing notification that contains general terms and conditions applicable to the bond sale.
Scheme for Noncompetitive Bidding Facility in the Auctions of Government Securities: The scheme that allows eligible individuals and institutions to bid non-competitively for up to 5% of the bond amount.
Reserve Bank of India Core Banking Solution EKuber system: The electronic system used for submitting bids in the auction.
Government of India 182 day Treasury Bills: Treasury Bills used as a benchmark for determining the variable interest rate on the bonds.
Prashant Goyal: Joint Secretary to the Government of India, the signing authority for the notification.
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated June 23, 2017
NOTIFICATION
Auction for Sale (Re-issue) of Government of India Floating Rate Bonds 2024
F. No.4 (7) W&M/2017: Government of India hereby notifies sale (re-issue) of Floating Rate Bonds 2024
(hereinafter called 'the Bonds') for an aggregate amount of ` 3,000 crore (nominal). The sale will be
subject to the terms and conditions spelt out in this notification (called ‘Specific Notification’) as also the
terms and conditions specified in the General Notification F. No. 4 (13)–W&M/2008, dated October 8,
2008 issued by Government of India.
Method of Issue
2. The Bonds will be sold through Reserve Bank of India, Mumbai Office, Fort, Mumbai- 400 001 in the
manner as prescribed in paragraph 5.1 of the General Notification F. No. 4 (13)–W&M/2008, dated
October 8, 2008 by a price based auction using multiple price auction method.
Allotment to Non-competitive Bidders
3. The Bonds 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
4. The auction will be conducted by Reserve Bank of India, Mumbai Office, Fort, Mumbai-400 001 on
June 30, 2017. Bids for the auction should be submitted in electronic format on the Reserve Bank of India
Core Banking Solution (E-Kuber) system on June 30, 2017. 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
5. The Stock will be eligible for “When Issued” trading in accordance with the guidelines issued by the
Reserve Bank of India.
Tenure
6. The Floating Rate Bonds will be of eight years tenure commencing from November 07, 2016. The
Bonds will be repaid at par on November 07, 2024.
Date of issue and payment for the stock
7. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on
June 30, 2017. The payment by successful bidders will be on July 3, 2017. i.e. the date of re-issue. The
payment for the Stock will include accrued interest on the nominal value of the Stock allotted in the
auction from the date of last coupon payment i.e., May 07, 2017 to July 2, 2017.
Interest
8. (i) The interest at a variable rate will be paid every half-yearly on November 07 and May 07.
(ii) The variable coupon rate for payment of interest on subsequent semi-annual period shall be the
average rate rounded off up to two decimal places, of the implicit yields at the cut-off prices of the last
three auctions of Government of India 182 day Treasury Bills, held up to the commencement of
the respective semi-annual coupon period. 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 coupon rate 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 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
(Prashant Goyal)
Joint Secretary to the Government of India