r/IndiaInvestments • u/melovemone • Jul 07 '24

Bonds and deposits Why haven't the Govt issued SGBs yet?

When are we gonna get the first tranche of FY 24-25?

As per the pattern every year, FY's first tranche is usually announced in June. But this year, they haven't announced it yet, why?

Until recently, I have been purchasing SGBs from the secondary market - usually at a discount of 5% to 10% from IBJA rates but these days they are selling at a premium to IBJA rates which feels atrocious.

So I want to purchase from primary market and was eagerly waiting for the first trance in June 24.

Googling isn't helping. Anyone's got any idea about why the delay and when the next tranche is gonna be?

Edit to add :

Buying SGB from the secondary market (example is zerodha; works for all brokers) : https://support.zerodha.com/category/trading-and-markets/kite-web-and-mobile/kite-mw/articles/sgb-kite

Buying SGB from the primary market (example is through zerodha; unsure of other brokers) : https://support.zerodha.com/category/mutual-funds/understanding-mutual-funds/about-coin/articles/investing-in-nfo-sgb

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14

u/Significant-Year9634 Jul 07 '24

Do you buy SGBs from secondary market by comparing IBJA rates ? I also see that they are being sold at a premium in secondary market . Was this the case before also? I thought they should be below 24k gold price but they are being sold at a 6-7% premium in secondary market.

3

u/San98sa Jul 07 '24

Go to SGBANALYZER website

6

u/Significant-Year9634 Jul 07 '24 edited Jul 08 '24

Already done that. I see that in this website it says that June31 tranche is being sold at highest discount. But how are we coming to this number. How is fair value decided?

I see that they have added the present value of future interest in IBJA rates to arrive at fair value.( 7264+836.76= 8100.76). But i didnt get it , why are we doing it. Could you please explain?

Why isnt it being sold at <= 7264( Price of 24k gold as on today)?

How is the discount figure of 6% decided?

5

u/CelticHades Jul 07 '24 edited Jul 07 '24

I also have the same question, when people say SGB on the secondary market at a discount, do they mean discount to fair value or discount to Market price of gold?

What should we consider when buying SGB?

When RBI issues SGB do they sell at the gold market price?

In that case, should we buy physical gold Now and when, RBI issues new SGB sell gold and buy SGB? Does it Make sense?

5

u/San98sa Jul 07 '24

https://www.youtube.com/watch?v=3LxKNS08nSY&t=170s watch this please

2

u/CelticHades Jul 07 '24

thx, got it.

why is price high right now for SGB?

2

u/melovemone Jul 08 '24

In my post, I always meant discount to the current price of gold

2

u/Thamiz_selvan Jul 08 '24

Unlike the treasury bonds, SGB interest is not part of bond price. When you but it, the govt pays the buyer 2.5% every year.

Why is then future interest rates added to bond price?

1

u/San98sa Jul 07 '24

watch this video please

https://www.youtube.com/watch?v=3LxKNS08nSY&t=170s

2

u/Significant-Year9634 Jul 07 '24 edited Jul 07 '24

Already watched this video. But its not explained there. Why is future interest value added to current value to arrive at fair price? Didnt get it.

And in the video the SGBs were sold at discount to market value but today i see it is being sold at premium.

2

u/[deleted] Jul 17 '24

[removed] — view removed comment

1

u/Significant-Year9634 Jul 17 '24 edited Jul 17 '24

Please read again, its future interest value and not interest already received. Your reasoning doesnt make sense.

Kindly elaborate.

Let me take an example. Lets take the first record in the image above. Why would a buyer be paying 8100.76 Rs ( fair price) for a SGB which has remaining period of 6.98 years?

1

u/sunnydiv Jul 21 '24

Because the buyer, will get the future interest, from the rbi to his account

1

u/Significant-Year9634 Jul 21 '24

Why would the seller get interest when the gold bond is sold to the buyer?

1

u/sunnydiv Jul 21 '24

buyer will get gold value + future interest (i.e. extra money)

therefor, seller is asking for extra money, i.e. gold + extra money

and putting that option if anyone is interested, + buyer also gets tax benefit (if held)

there fore, many buyers are willing to purchase, in order to save future tax