Executive Summary:
The Government of India announces the sale/reissue of multiple government stocks via auction to be conducted by the Reserve Bank of India (RBI) on May 31, 2019. This notification outlines the terms and conditions for the sale, including the date of maturity, notified amount, and method of auction. Payment by successful bidders is due on June 3, 2019.
Key Points / Main Content:
Auction Details:
* Sale/reissue of government stocks, including: 7.00 GS 2021, 7.27 GS 2026, GOI FRB 2031, 7.62 GS 2039, and 7.63 GS 2059.
* Total notified amount is ₹17,000 crore, with an option for GoI to retain additional subscriptions up to ₹1,000 crore against any one or more securities.
* The sale is subject to the terms and conditions specified in the notification and the General Notification F.No.42WM2018, dated March 27, 2018.
* Auction to be conducted by RBI, Mumbai Office on May 31, 2019.
Bidding Process:
* Bids to be submitted electronically on RBI’s E-Kuber system on May 31, 2019.
* Non-competitive bids: 11:30 a.m. to 12:00 noon.
* Competitive bids: 11:30 a.m. to 12:30 p.m.
* Up to 5% of the notified amount will be allotted to eligible individuals/institutions via a non-competitive bidding facility.
Post-Auction & Payment:
* Auction results to be displayed by RBI, Mumbai Office on May 31, 2019.
* Payment by successful bidders due on June 3, 2019, including accrued interest.
Interest and Repayment:
* Interest accrues on the nominal value from the original issue/last coupon payment date, paid semi-annually.
* Stocks repaid at par on maturity date.
Floating Rate Bond (FRB) Specifics:
* Interest rate for GOI FRB 2031 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.
* Base rate for the coupon period Dec 7, 2018 to Jun 6, 2019 is 7.05% per annum, making the interest rate for this period 8.05% per annum.
Impact Analysis:
Bidders (Individuals and Institutions):
* Impact: Opportunity to invest in government stocks with varying tenures and interest rates.
* Action Required: Submit bids electronically via RBI’s E-Kuber system within the specified timeframes on May 31, 2019, and ensure payment by June 3, 2019.
Reserve Bank of India (RBI):
* Impact: Responsible for conducting the auction, displaying results, and managing the allotment and payment process.
* Action Required: Conduct the auction on May 31, 2019, display results, and process payments from successful bidders by June 3, 2019.
Government of India:
* 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 within the Government of India responsible for economic and financial matters.
Department of Economic Affairs: A department within the Ministry of Finance, Government of India, responsible for economic policies and programs.
Reserve Bank of India: The central bank of India, responsible for regulating the banking system and managing the country's currency.
Government Stock: Debt instruments issued by the Government of India to raise funds from the market.
7.00 GS 2021: A Government Stock with a 7.00% coupon rate, maturing in 2021.
7.27 GS 2026: A Government Stock with a 7.27% coupon rate, maturing in 2026.
GOI FRB 2031: A Floating Rate Bond issued by the Government of India, maturing in 2031.
E-Kuber: The Core Banking Solution system of the Reserve Bank of India used for submitting bids in electronic format.
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated May 27, 2019
NOTIFICATION
Auction for Sale (re-issue) of Government Stock (GS)
F.No.4(6)W&M/2019: 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)
7.00% GS 2021 Jan 21, 2019 02-00-00 Jan 21, 2021 Price Multiple 3,000
7.27% GS 2026 Apr 8, 2019 07-00-00 Apr 8, 2026 Price Multiple 3,000
GOI FRB 2031 May 07, 2018 13-07-00 Dec 07, 2031 Price Multiple 5,000
7.62% GS 2039 Apr 8, 2019 20-05-07 Sep 15, 2039 Price Multiple 2,000
7.63% GS 2059 May 6, 2019 40-01-11 Jun 17, 2059 Price Multiple 4,000
Subject to the limit of `17000 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 May 31, 2019.
Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-
Kuber) system on May 31, 2019. The non-competitive bids should be submitted between 11.30 a.m. and 12.00 noon
and the competitive bids should be submitted between 11.30 a.m. and 12.30 pm.
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 May 31,
2019. The payment by successful bidders will be on June 3, 2019 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 upto which Date of Coupon
Name of the Coupon rate Date of Last Coupon
accrued interest is payments
Security (%) payment
due (month / date)
7.00% GS 2021 7.00 New Stock Jun 2, 2019 Jul 21 and Jan 21
7.27% GS 2026 7.27 New Stock Jun 2, 2019 Oct 8 and Apr 8
GOI FRB 2031 Variable* Dec 7, 2018 Jun 2, 2019 Jun 7 and Dec 7
7.62% GS 2039 7.62 New Stock Jun 2, 2019 Sep 15 and Mar 15
7.63% GS 2059 7.63 New Stock Jun 2, 2019 Jun 17 and Dec 17
* 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 Dec 7, 2018 to Jun 6, 2019 is 7.05% per annum. Accordingly, the rate of
interest on FRB 2031 for this period shall be 8.05% 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