The third phase of Bharat Bond ETF is going to start from December 3. That is, good news for you because the government intends to collect Rs 10,000 crore through Bharat Bond ETF. This subscription will end on December 9. Further, the base size of the issue will be Rs 1,000 crore with free green shoe option. The third tranche of the ETF is expected to mature in April 2032. Bharat Bond ETF is an initiative of Department of Investment and Public Asset Management under Ministry of Finance and managed by Edelweiss MF. Let us first tell you what is Bharat Bond ETF. It is an exchange traded fund, which invests in bonds of public sector companies. At present, ETFs invest only in ‘AAA’ rated bonds of public sector companies. The Scheme Information Document i.e. SID has already been filed with the capital market regulator Securities and Exchange Board of India i.e. SEBI.
Analysis of 1st, 2nd installment
The third installment of Bharat Bond ETF is starting from December 3. Earlier the second installment was launched in July 2020. It was oversubscribed more than three times and the government raised Rs 11,000 crore from it. The government had received around Rs 12,400 crore in its first offer in December 2019. At present, there are four Bharat Bond ETFs with different maturities – April 2023, April 2025, April 2030 and April 2031. These ETFs are managing investor wealth of Rs 36,359 crore as on October 31, 2021. The Bharat Bond ETF offered maturity options of 5 and 12 years in its second tranche, while the maturity options in the first tranche were of 3 and 10 years.
Understand Bharat Bond ETF
This is the country’s first Corporate Bond Exchange Traded Fund (ETF). Investors can invest as low as Rs 1,000 in Bharat Bond ETF. Thereafter, investments can be made in multiples of Rs 1,000. The Exchange Traded Fund will invest only in AAA rated public sector bonds. After Bharat Bond ETF, passively managed debt funds have boomed in the mutual fund industry. While 11 passive-managed debt schemes have been filed with SEBI, many have already been launched by fund houses.
