GOI Bonds purchase

When I am trying to place an order for purchase of GOI 2035 bonds.

Can some body help me understand the below doubts:

Why is the price calculated at 102820?
What is the face value of this bond?
What are the chances of it accepted as Collateral by NSE?
Does it come under cash collateral?

Kindly explain as this is my first time purchase GOI. My intention is to pledge for margin.

2 Likes

@ShubhS9 @siva

Why not look at Bharat Bonds which are trading in the market? It’s accepted as collateral with minimum haircut.

@r95990 What advantage do you see GOI 2035 over a bharat bond?

I already hold some Bharat Bond ETF.
Want to diversify my portfolio.

When you submit a bid, since the auction price is unknown, the exchanges block an extra amount. Based on the actual yield discovered in the auction, your money will be refunded. You can check out more details here.

Face value of bonds is 100.

G-Secs are accepted as collateral and are considered as cash equivalent. You can check the list of securities available for pledging here.

1 Like

Appreciate your quick reply.
So the purchase price is defined by auction. So should I still purchase if the bond price goes out of my preferred rate.

and is the extra Rs.2.82 calculated by zerodha ? if Yes, how is it calculated.

Like Shubh mentioned, the price is discovered in the auction. As a reference point the price/yield will be similar to bonds of similar maturities.
https://www.ccilindia.com/OMHome.aspx

Exchanges, not Zerodha. The basis on which they block extra isn’t quite clear but, in general to cover for any price spikes.

Thanks.

1 Like

BTW, as discussed in GoI Dated Securities - #6 by cvs
instead of bidding in the auction and waiting,
you can already purchase the same GSEC on secondary market (eg.NSE).

Nearly 2.4 Lacs worth of the same GSEC are currently available on NSE.
That too at a spread of 10-50paise cheaper than the expected price
used to calculate the indicative yield of 6.89% for the upcoming GSEC auction.

Resulting in upto 6.96% yield on the same bond.
(for the first 900 units available at ~Rs.98)

3 Likes

Oh! Thanks, You saved me some money.

Does that mean the offer in coin is not a really fresh issue and the offer keeps coming.
Am I correct?

Well, that ultimately depends on what the price at the upcoming auction turns out to be.
I wonder if there’s some way to find out how over-subscribed/under-subscribed an ongoing GSEC offer is… :thinking:

Anyway, definite plus-points of buying GSECs on the secondary-market/exchange :

  • No need to block any additional margin amount waiting for the auction.
  • Saves some time of uncertainty waiting for the auction.
1 Like

@Bhuvan following the above link you shared,
it appears that this GSEC 667GS2035 that we are discussing in this topic-thread,
is available to be purchased significantly cheaper at (~Rs.95.50) on this NDS-OM Odd-Lot market! :grinning:

NOTE: The prices on NDS-OM are clean-prices.
When buying a Bond on NDS-OM, an additional charge is applied,
which is equal to the Accrued Interest for the current period.
[ Source ]

667GS2035-NDS-OM-ODD_LOT-07APR2022
[Source]


Q1. How to interpret the volume of bonds units available in NDS-OM Odd Lot ?
i.e. how to convert the numbers in Offer-Amt. column in the screenshot above, to the number of GSEC bonds ?

FWIW, the RBI NDS-OM FAQ says…

NDS OM has two segments:- Standard Lot segment wherein trades happen in multiples of Rs 5 crores.
For the Retail Investor there is an Odd Lot segment, wherein trades can happen in multiples of Rs 10000/-.

Does Offer-Amt. = 0.45
mean 0.45 x lot-size (of 100)
i.e. 45 GSEC bond units of face-value Rs.100 each ?

Q2. Is the only way to participate in NDS-OM for retail investors, to open an RBI Retail Direct account ?
(or any other alternatives to participate in NDS-OM for those who already have demat and trading accounts?)

I guess so.

Yes. No alternatives, unless you find someone will to sell your off-market.

1 Like

Hi, cvs! Just to update you on this!

Based on your message the other day, made an investment of Rs. 5,00,000/- in two halves.
One half I have purchased from the market at 98/-
And, the second half, I applied for the issue and got an allotment at Rs.96.57

By the way, you didn’t save me any money, I take back my words. :laughing: Just kidding.

Thanks

1 Like

Hi, Jashjacob!

Don’t know with which intention you have suggested this, a rethink based on tax advantages, I am convinced that Bharat Bond has the best return.

Kudos for you suggestion! :clap:

Nice way to hedge the risks! :clap:

Now, that we have seen that the indicative yield is not very accurate,
i continue to wonder how does one go about monitoring a GSEC subscription to better estimate the yield?

To test/learn the GoI Bond Purchasing option on Coin applied for 500 units as shown below @ 103.68 few days back…

| Symbol | Units | Price |
| 6.99% GS 2051 | 500 | ₹ 51,840 |

Final allocation has happened @ 95.28 Clean Price + 2.25 Accured Interest so total @ 97.53…

Can someone pls guide me to a resource (article, video etc) on how to understand the yield etc on this or if possible explain the calculation here only…

Thanks in advance!!

How to identify clean price and accured interest.

Are there any reports provided by Zerodha / RBI ?
@Bhuvan @ShubhS9

In my case this was mentioned in the PDF sent by Zerodha in the G-sec Invoice email…

The price of G-Secs in the cash market segment you see on Kite is dirty price. To get the clean price, you need to subtract the accrued interest.

1 Like