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) on November 30, 2018. The auction involves multiple Government Securities with varying maturity dates and coupon rates. Payment by successful bidders is due on December 3, 2018.
Key Points / Main Content:
Auction Details:
* Auction is for the sale/reissue of Government Stocks (GS).
* The auction will be conducted by the Reserve Bank of India (RBI), Mumbai Office.
* Date of Auction: November 30, 2018.
* Bids to be submitted electronically 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.
Securities Offered:
* 6.65 GS 2020 (Maturity: Apr 09, 2020): ₹2,000 Crore
* 7.37 GS 2023 (Maturity: Apr 16, 2023): ₹2,000 Crore
* GoI FRB, 2031 (Maturity: Dec 07, 2031): ₹3,000 Crore
* 7.40 GS 2035 (Maturity: Sep 09, 2035): ₹2,000 Crore
* 7.06 GS 2046 (Maturity: Oct 10, 2046): ₹3,000 Crore
Subscription and Allotment:
* Total notified amount: ₹12,000 Crore.
* GoI has the option to retain additional subscriptions up to ₹1,000 Crore against any one or more securities.
* Up to 5% of the notified amount will be allotted to eligible non-competitive bidders.
Payment and Interest:
* Payment Date: December 3, 2018.
* Payment includes accrued interest from the original issue/last coupon payment date.
* Interest will be paid half-yearly.
* Stocks will be repaid at par on maturity date.
* Details of coupon rates, last coupon payment dates, and accrued interest due dates are provided for each security.
* For GoI FRB 2031, the interest rate is variable, based on the weighted average yield of the last 3 auctions of 182 Day T-Bills plus a fixed spread of 100 basis points.
When Issued Trading:
* The Stock will be eligible for When Issued trading as per RBI guidelines.
Impact Analysis:
Bidders (Individuals and Institutions):
Impact: Opportunity to invest in Government Stocks with varying maturities and interest rates.
Action Required: Submit bids through the RBI’s e-Kuber system within the specified timeframes on November 30, 2018, and ensure payment by December 3, 2018, if the bid is successful.
Reserve Bank of India (RBI):
Impact: Responsible for conducting the auction and displaying the results.
Action Required: Conduct the auction on November 30, 2018, display the results, and facilitate the payment process on December 3, 2018.
Government of India (GoI):
Impact: Raises funds through the sale/reissue of Government Stocks.
Action Required: Monitor the auction process and exercise the option to retain additional subscriptions if deemed necessary.
Key Entities Referenced
Ministry of Finance: The ministry responsible for economic policy in the Government of India.
Department of Economic Affairs: A department within the Ministry of Finance, Government of India, responsible for economic management.
Reserve Bank of India: The central bank of India, responsible for conducting auctions of government stocks.
Mumbai, Maharashtra: The city where the Reserve Bank of India's office is located, which conducts the auctions.
Government Stock: Refers to government securities being auctioned, including fixed rate and floating rate bonds.
6.65 GS 2020: A specific government stock with a coupon rate of 6.65% maturing in 2020.
7.37 GS 2023: A specific government stock with a coupon rate of 7.37% maturing in 2023.
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 November 26, 2018
NOTIFICATION
Auction for Sale (Re-issue) of Government Stock (GS)
F.No.4(6)W&M/2018: Government of India(GoI) hereby notifies sale (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 Rs Crore)
6.65% GS 2020 Apr 09, 2018 02-00-00 Apr 09, 2020 Price Multiple 2,000
7.37% GS 2023 Apr 16, 2018 05-00-00 Apr 16, 2023 Price Multiple 2,000
GoI FRB, 2031 May 07, 2018 13-07-00 Dec 07, 2031 Price Multiple 3,000
7.40% GS 2035 Sep 09, 2005 30-00-00 Sep 09, 2035 Price Multiple 2,000
7.06% GS 2046 Oct 10, 2016 30-00-00 Oct 10, 2046 Price Multiple 3,000
Subject to the limit of `12000 Cr, being total notified amount, GoI will have the option to retain additional subscription
up to `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 November 30,
2018. Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking
Solution (E-Kuber) system on November 30, 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 November
30, 2018. The payment by successful bidders will be on December 3, 2018 i.e. the date of 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 Oct 09, 2018 Dec 02, 2018 Apr 09 and Oct 09
7.37% GS 2023 7.37 Oct 16, 2018 Dec 02, 2018 Apr 16 and Oct 16
GoI FRB 2031 Variable* Jun 07, 2018 Dec 02, 2018 Dec 07 and Jun 07
7.40% GS 2035 7.40 Sep 09, 2018 Dec 02, 2018 Mar 09 and Sep 09
7.06% GS 2046 7.06 Oct 10, 2018 Dec 02, 2018 Apr 10 and Oct 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