Auction for Sale (re-issue) of ‘7.06% GS 2028’, ‘7.18% GS 2033’, and ‘7.30% GS 2053’

The Government of India (GoI) Puts Up Substantial Government Securities for Auction

New Delhi, September 19, 2023 – In a significant financial move, the Government of India (GoI) has announced the sale (re-issue) of three substantial government securities. These securities, namely ‘7.06% Government Security 2028,’ ‘7.18% Government Security 2033,’ and ‘7.30% Government Security 2053,’ are set to go under the hammer in an upcoming auction. This move is bound to draw the attention of investors and financial institutions alike.

Overview of the Auction

The GoI has scheduled the auction for the following government securities:

1. 7.06% Government Security 2028: The GoI has fixed a notified amount of ₹8,000 crore (nominal) for this security. The auction will employ the price-based auction method using a uniform price.
2. 7.18% Government Security 2033: For this security, a notified amount of ₹14,000 crore (nominal) has been set. Similar to the previous security, the auction will utilize the price-based auction method with a uniform price.
3. 7.30% Government Security 2053: The GoI has earmarked a notified amount of ₹11,000 crore (nominal) for this security. The auction for this security will also use the price-based auction method, but with a multiple price method.

Additionally, the GoI has the option to retain additional subscriptions up to Rs 2,000 crore for each of the mentioned securities.

Auction Details

The Reserve Bank of India, Mumbai Office, Fort, Mumbai, will be responsible for conducting these auctions. The auctions are scheduled to take place on September 22, 2023 (Friday).

Inclusion of Individuals and Institutions

In a noteworthy inclusion, up to 5% of the notified amount of the sale of these securities will be allotted to eligible individuals and institutions. This allocation will be done in accordance with the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

Bidding Process

Both competitive and non-competitive bids for the auction should be submitted electronically on the Reserve Bank of India Core Banking Solution (E-Kuber) system. The non-competitive bids should be submitted between 10:30 a.m. and 11:00 a.m., while the competitive bids should be submitted between 10:30 a.m. and 11:30 a.m. on September 22, 2023.

Results and Payment

Investors and interested parties can mark their calendars for the announcement of auction results on September 22, 2023 (Friday). Successful bidders should be prepared for payment on September 25, 2023 (Monday).

Trading Eligibility

It’s worth noting that these securities will be eligible for “When Issued” trading, following the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India, as amended from time to time.

In conclusion, the GoI’s decision to auction these government securities presents a significant opportunity for investors and institutions to secure these valuable assets. As the auctions approach, market participants will undoubtedly keep a close eye on these developments, which could have far-reaching implications for the financial landscape of India.

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Frequently Asked Questions (FAQs)

1. What are government securities? Government securities, often referred to as “G-secs,” are debt instruments issued by the government to raise funds. They are considered one of the safest investment options.
2. What is the significance of the uniform price method in auctions? The uniform price method ensures that all successful bidders pay the same price, which is the highest accepted bid. This method promotes fairness and transparency in the auction process.
3. How can individuals and institutions participate in the auction? Eligible individuals and institutions can participate in the auction through competitive and non-competitive bidding on the Reserve Bank of India’s E-Kuber system.
4. What is “When Issued” trading? “When Issued” trading allows investors to buy or sell securities before their official issuance. It provides an opportunity to gauge market demand and interest in upcoming securities.
5. What are the potential implications of these auctions on the financial market? These auctions can influence interest rates, liquidity, and investment strategies in the financial market. Investors and institutions often analyze the results for insights into the economic outlook.