Inflation Indexed Bonds-What,When,How?
Inflation Indexed Bonds
Inflation Indexed Bonds are issued to hedge against Inflation. Inflation Indexed Bonds are issued in place of Capital Indexed Bonds issued during 1997, which provides inflation protection only to the principal amount ant not to interest payment. On the other hand Inflation Indexed Bonds provide inflation protection to both principal and interest payments. Further it is also used as an instrument for repo transactions.
As Inflation Indexed Bonds are Government securities, they can be tradable in the secondary market like other Securities. Investors will be able to trade them in NDS-OM, NDS-OM (web-based), OTC market, and stock exchanges. Further, it will be underwritten by Primary Dealers. To begin with, Inflation Indexed Bonds will be issued for a maturity period of 10 years.
Recently, GOI has announced sale of 1.44 per cent 2023 Inflation Indexed Bonds on September 24.