Executive Summary:
This notification announces the sale/reissue of Government of India Floating Rate Bonds 2024 for an aggregate amount of 3,000 crore nominal. The sale will occur through a price-based auction conducted by the Reserve Bank of India (RBI) on May 12, 2017. Successful bidders will make payments on May 15, 2017, which includes accrued interest. The bonds have a tenure of eight years and will be repaid on November 07, 2024.
Key Points / Main Content:
* **Bond Details:**
* Bonds: Government of India Floating Rate Bonds 2024.
* Aggregate Amount: 3,000 crore nominal.
* **Auction Details:**
* Conducted by: Reserve Bank of India, Mumbai.
* Date: May 12, 2017.
* Method: Price-based auction using a multiple price auction method.
* Bidding: Electronic format via RBI's e-Kuber system.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* **Allotment:**
* Non-competitive Bidders: Up to 5% of the notified amount will be allotted to eligible individuals/institutions.
* **Tenure and Repayment:**
* Tenure: Eight years, commencing November 07, 2016.
* Repayment: At par on November 07, 2024.
* **Payment and Interest:**
* Payment Date: May 15, 2017 (includes accrued interest from May 07, 2017 to May 14, 2017).
* Interest Payment: Every half-yearly on November 07 and May 07.
* Variable Coupon Rate: Based on the average yield of the last three auctions of Government of India 182-day Treasury Bills. If discontinued, the coupon rate will be the average of YTM rates for six-month Government of India Securities.
* **Trading:**
* Eligible for When Issued trading per RBI guidelines.
Impact Analysis:
Individuals and Institutions Eligible for Non-Competitive Bidding:
* Impact: Have the opportunity to secure up to 5% of the bond issue.
* Action Required: Submit non-competitive bids between 10.30 a.m. and 11.30 a.m. on May 12, 2017.
Bidders Participating in the Auction:
* Impact: Can acquire the Floating Rate Bonds 2024 through a competitive bidding process.
* Action Required: Submit competitive bids electronically via RBI's e-Kuber system between 10.30 a.m. and 12.00 noon on May 12, 2017, and make payments by May 15, 2017, if successful.
Reserve Bank of India:
* Impact: Responsible for conducting the auction and displaying the results.
* Action Required: Conduct the auction on May 12, 2017, display results at its Mumbai office, and manage bond issuance and payments.
Key Entities Referenced
Floating Rate Bonds 2024: Government of India bonds being reissued through an auction.
Reserve Bank of India: The central bank of India, responsible for conducting the auction and displaying the results.
Mumbai, Maharashtra: Location of the Reserve Bank of India office where the auction results will be displayed.
General Notification F. No. 4 13WM2008, dated October 8, 2008: A prior notification by the Government of India that contains terms and conditions applicable to the bond sale.
Government of India 182 day Treasury Bills: Treasury Bills used as a benchmark for setting the variable interest rate on the Floating Rate Bonds.
Scheme for Noncompetitive Bidding Facility in the Auctions of Government Securities: Scheme allowing eligible individuals and institutions to bid non-competitively for up to 5% of the notified bond amount.
Department of Economic Affairs: A department under the Ministry of Finance, Government of India.
Prashant Goyal: Joint Secretary to the Government of India, signing the notification.
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated May 08, 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 May
12, 2017. Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core
Banking Solution (E-Kuber) system on May 12, 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
on May 12, 2017. The payment by successful bidders will be on May 15, 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 May 14, 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