Borrowing Cheap with Zero Coupon Bonds: Three Caselets
| Case Code: FINC181 Case Length: 8 Pages Period: 2019-2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.200 Organization: Government of Ghana Industry: Government Countries: Ghana Themes: |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Caselet 3: India Uses ZCBS to Fund its Banks
In 2017-18, the Government of India (GoI) adopted the interest-bearing recapitalization bond route to pump capital into the Public Sector Banks (PSBs). The PSBs needed capital to meet regulatory requirements under the Basel III accord. Under the recapitalization bonds route, the GoI issued recapitalization bonds to the PSBs which sought capital. A particular PSB purchased the recapitalization bonds and the GoI got funds which went back to the bank as share capital. So, in the entire process, the GoI did not pay anything, and the share capital of that particular bank increased..
Exhibits
Exhibit I: Selected Economic Indicators of Ghana
Exhibit II : Various Bonds Issued by Government of Ghana
Exhibit III : Selected Information about Apple’s 0.000% Notes due 2025 (“2025 Notes”)
Exhibit IV: Recapitalization Bonds Issued and Interest Paid by Government of India
from FY18 to FY20
Exhibit V: Maturity Details of Special Government of India Security Issued to P&SB
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