7.50% GG 2056 Yield

[sandeep_cs]

@siva

Indicative yield shown is : 7.3
Gsec Price shown is : 109
This is a 7.5 % coupon , so if we are getting alloted at 109 Price the , Effective yield will 6.9 Perc . So why its showing the Indicative yield as 7.3 ?

[Akash_Shah]

@sandeep_cs

his is a 7.5 % coupon , so if we are getting allotted at 109 Price the

109 is not allotment price. Since price is discovered in auction, allotment price is not known. So exchange blocks extra amount. Allotment price should be lower than that, closer to indicative yield.
There is a support article on this.

On what basis does Zerodha block money for the bids for G-secs?

[sandeep_cs]

If it’s an auction, how can we tender the price we are willing to buy at?

[nithin_kumrr]

@sandeep_cs

If it’s an auction, how can we tender the price we are willing to buy at?

You’re bidding through the non-competitive, so you don’t quote a price. You only specify the amount you want to invest. The price is discovered through the auction, and you get allotted at the weighted average price determined in the auction.

Basics of Government bonds

The yields on Govt bonds have risen substantially this year and there’s a lot of interest from investors. But we also get a lot of questions from investors about how Govt bonds work. Let’s understand the basics in this topic. The Govt needs money to finance various activities such as health, infrastructure, defence & other obligations. So, the Reserve Bank of India (RBI) issues bonds on behalf of the central and state governments to raise money to fund these activities. How are Govt securiti…

[sandeep_cs]

If the Bid - Ask spread is not there , Who decide this and on what basis . Is that based on the indicative Yield?
Thank You for the link .
Is it possible to buy Gsec via coin , any advantage than kite?

[Akash_Shah]

@sandeep_cs

If the Bid - Ask spread is not there , Who decide this and on what basis . Is that based on the indicative Yield?

There are some nuances to this. Gsec are auctioned where participants make Bids and RBI decides to accept or not. But only authorized participants are allowed to participate in auction. Retailers cannot directly participate in it. This is called competitive bidding. And price is discovered by this.

To increase participation of retailers in Govt securities, RBI introduced concept of Non-competitive bidding where retail can participate. Here you can only bid and you will be allotted based on price discovered in competitive bidding.

So basically big participants (bank, primary dealers, insurance companies etc.) does competitive bidding to discover price, and retail can do non-competitive bidding and buy at discovered price.

RBI does have some nice FAQ on govt securities auction.
Reserve Bank of India

Hope this helps.

[sandeep_cs]

Thank you @Akash_Shah , regarding purchase via coin - Please share details

[Akash_Shah]

@sandeep_cs

regarding purchase via coin - Please share details

I have never used coin, so I don’t know how that works. But I thought coin was platform to buy mutual funds, not sure if you can buy bonds directly through it.
But I would let someone else answer that.

[nithin_kumrr]

@sandeep_cs

purchase via coin - Please share details

@Akash_Shah

But I would let someone else answer that.

Earlier, we had G-Secs on Coin, but later moved them to Kite to give them more exposure. You can currently apply through Kite, and there has been no operational change apart from this.