Selling Bonds to the Reserve Bank
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- Important information for investors
- What bonds will the Bank buy?
- How much can I sell?
- How does the Bank set its price for the bonds?
- What charges apply?
- How can I apply?
- 1. Important information for investors
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Staff of the Reserve Bank are unable to provide investment advice. Information on this website regarding the Commonwealth Government Bond Facility for Small Investors does not constitute investment advice. Applicants should obtain independent financial advice before selling Commonwealth Government bonds. While interest payments and the face value payment at maturity are guaranteed by the Commonwealth Government, it is possible for capital gains or losses to be made if Bonds are sold prior to maturity.
- 2. What bonds will the Bank buy?
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The Bank will buy Commonwealth Government Treasury Fixed Coupon Bonds, Treasury Indexed Bonds and Tax-Free Bonds from investors at market-related prices.
- 3. How much can I sell?
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Applications may be lodged for amounts of $1,000 face value and in multiples of $1,000 up to $250,000 per investor per day (all series combined). Requests to sell amounts in excess of this will be considered at the Bank’s discretion.
- 4. How does the Bank set its price for the bonds?
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Prices quoted by the Bank are based on current market prices. Prices may change during the day. The actual price paid by the Bank will be that prevailing at the time when all necessary documents of transfer are received by the Bank.
For each series, the price the Bank offers to pay when buying will be lower than the price the Bank asks when selling, consistent with market practice. The approximate price for a Bond can be obtained from the Reserve Bank (in Sydney or Canberra).
The price paid by the Bank will allow for interest accrued up to the date of sale. The only exception to this is when Bonds are sold during the ex-interest period, which commences seven days prior to a coupon payment date. In such cases, the sale price excludes accrued interest but the Seller will receive the impending coupon payment in full.
The bond pricing formulae are contained within the Information Memorandum for Treasury Bonds and Treasury Indexed Bonds or can be provided by the Reserve Bank on request.
- 5. What charges apply?
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The Bank currently applies an administrative charge of $2.50* per $1,000 face value. This charge is not included in any price quoted for securities.
- 6. How can I apply?
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You should complete the Sale Form. The form may be lodged in person, or mailed to the Registry for Commonwealth Government Inscribed Stock at the Reserve Bank.
Facsimile or e-mail requests will not be accepted.
The Bank will issue you with a cheque for the proceeds of the sale less the administrative charge. Alternatively, the Bank can credit the proceeds of the sale direct to an Australian Dollar account, in Australia.
Footnote
* Charges as stated are current as at 1 March 2004 and are subject to change at the Bank's discretion. [back to text]
