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Government
of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New
Delhi, dated November 01, 2016
NOTIFICATION
Auction
for Sale of Government of India Floating Rate Bonds 2024
F. No.4 (3) W&M/2016(iii):
Government of India hereby notifies sale of Floating Rate Bonds
(hereinafter called 'the Bonds') of 8 year tenure for an aggregate amount
of Rs 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 November
04, 2016. Bids for the auction should be
submitted in electronic format on the Reserve Bank of India Core Banking
Solution (E-Kuber) system on November
04, 2016. 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 November 04, 2016.
The payment by successful bidders will be on November 07, 2016.
i.e. the date of issue.
Interest
8. (i) Interest will accrue from November 07, 2016 (date of issue) and will
be payable every half-year on May
07 and November 07.
(ii) The variable coupon rate
for payment of interest on the Bonds 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 before the date of
notification (Please
see Annex for illustration). The coupon rate for payment of interest
on subsequent semi-annual periods 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 periods. 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 coupon rate for payment of interest applicable for
half year ending May 07, 2017 shall be 6.51 per cent. 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
Illustration:
Rate of interest payable on Floating Rate Bonds 2024
Calculation of variable coupon
rate applicable for the half year ending May 07, 2017
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S.No.
|
Date of auction
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Cutoff price
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Implicit yield at cut off price
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1
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Sep 21, 2016
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96.80
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6.6297
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2
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Oct 05,2016
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96.89
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6.4373
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3
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Oct 19, 2016
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96.88
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6.4587
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Total
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19.5257
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@ annualized for 365 day year
Variable Coupon Rate = (19.5257
/ 3) = 6.5086
Rounded off to two decimal
places = 6.51
Interest rate applicable for the
year
(November 07, 2016 to May 06,
2017) = 6.51 per cent per annum
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