1. The Rules for the issuance and trading of securities of the Government of the Republic of Lithuania, taking loans on behalf of the State and subscription for other binding debt instruments (hereinafter referred to as "the Rules") govern:

 

2. Definitions for the purposes of the Rules:

 

Settlement of GS shall mean the completion of a sale transaction on the primary and/or secondary securities market whereby the seller receives funds for the securities purchased by the buyer.

 

Provider of financial services shall mean a loan provider, an authorised intermediary of public securities trading, a person authorised by the GS issuer, GS auctioneer, fiscal agent, payment agent, creditor under other binding debt instruments or provider of financial services under other instruments related to Government borrowing on behalf of the State or other financial services.

 

Fiscal agent shall mean a Lithuanian or foreign bank with which the GS issuer has signed a contract on the organisation of settlement of the GS or other binding debt instruments.

 

Authorised intermediary of public securities trading shall mean an intermediary of public securities trading that has signed agreements with the GS issuer on the participation in GS auction , GS issuance (subscription) and (or) financial or investment services.

 

Other instruments related to Government borrowing on behalf of the State shall mean agreements entered into by the Ministry of Finance and the provider of financial services or other services related to Government borrowing on behalf of the State on financial derivatives and other instruments of Government borrowing on behalf of the State as well as on application of management instruments of obligations created by Government borrowing on behalf of the State, also contracts, agreements, confirmation letters and other documents necessary to ensure fulfilment of the obligations created by Government borrowing on behalf of the State (such as a fiscal agent agreement, paying agent agreement, process agent agreement, legal services contract etc.).

 

Euro Commercial Paper Programme of the Republic of Lithuania shall mean an instrument, approved by the Minister of Finance, falling within the category of other instruments related to Government borrowing on behalf of the State, which sets out the general terms governing subscription for Government euro commercial papers.

 

Early GS redemption auction shall mean an auction where the GS issuer offers investors an opportunity to redeem GS before maturity.

 

Early GS redemption shall mean repayment by the GS issuer of funds for the GS to investors through the intermediaries of public securities trading or its own authorised persons before maturity, and cancellation of the respective GS. Repayable funds consist of the nominal value of the GS or the nominal value plus interest, as specified in the terms of issuance, or the securities' value agreed upon by the GS issuer and investor, or such agreed value plus interest.

 

A State- or municipality-controlled enterprise shall correspond to its definition in the Rules for the collection, storage and submission to the European Commission of information on the financial relations of State or municipal authorities and State- or municipality-controlled enterprises as well as enterprises obliged to keep separate accounts, approved by Government Resolution No 768 of 14 July 2005 (Official Gazette, 2005, No 87-3264; 2007, No 135-5477).

 

Intermediary of public securities trading shall correspond to its definition on the Law of the Republic of Lithuania on Securities (2007, No 17-626; 2011, No 145-6819).

 

Government treasury bill shall mean a GS with a nominal maturity of up to one year.

 

Government euro commercial paper shall mean a short-term (one year maximum maturity) binding debt instrument subscribed for under the Euro Commercial Paper Programme of the Republic of Lithuania.

 

Government bond shall mean a GS with a nominal maturity longer than one year.

 

Government saving note shall mean retail GS.

 

Payment for GS shall mean the transfer of funds for the GS purchased by investors on the primary securities market to the GS issuer or its authorised person.

 

GS coupon payment shall mean interest on GS, paid by the GS issuer.

 

GS coupon period shall mean a period between two adjacent GS coupon payments.

 

GS coupon rate shall mean an annual rate of interest payable at specified intervals by the GS issuer to the investor, expressed as a percentage of the GS nominal value.

 

GS auctioneer shall mean a person, appointed by the GS issuer, that has technical capacities to organise GS distribution by auction and has signed an auction organisation services contract with the GS issuer.

 

GS issuer shall mean an institution offering or issuing GS. The GS issuer shall be the Government, represented by the Ministry of Finance.

 

Authorised person of the GS issuer shall mean a person selected by the GS issuer, other than an authorised intermediary of public securities trading, that has technical capacities to distribute GS to retail investors and has signed a GS distribution services contract with the GS issuer.

 

GS redemption shall mean repayment of funds for GS by the GS issuer to investors through intermediaries of public securities trading or its own authorised persons, upon maturity, and cancellation of the respective GS. Repayable funds shall consist of the nominal value of the GS or the nominal value plus interest, as specified in the terms of GS issuance.

 

GS issuance by auction shall mean a method of GS issuance whereby the GS issuer accepts and processes bids for GS on the primary securities market through a GS auctioneer, while the yield of the auctioned GS with pre-determined characteristics is established with regard to the yield identified in the bids for these securities received from authorised intermediaries of public securities trading (GS auction participants).

 

GS issuance by private placement shall mean a method of GS issuance whereby the GS issuer sells GS on the primary securities market under the procedure prescribed in the Rules to one or several authorised intermediaries of public securities trading who acquire, on their own behalf, the entire GS issue thus issued, while the securities characteristics and yield are determined by negotiations between the GS issuer and the authorised intermediaries of public securities trading.

 

Syndicated issuance of GS shall mean a method of GS issuance whereby the GS issuer accepts and executes bids for such securities on the primary securities market through generally several (or one) authorised intermediaries of public securities trading, while the GS characteristics and the yield are determined on the basis of the demand for them as well as the yield specified in the investors' bids for these securities.

 

Retail issuance of GS shall mean a method of GS issuance whereby the issuer sells GS of pre-determined characteristics and yield on the primary securities market through its authorised person or authorised intermediaries of public securities trading to all entities that have the right to invest in such securities.

 

3. To obtain the most economically advantageous borrowing terms, the Ministry of Finance:

 

4. The Ministry of Finance shall issue GS, denominated in the euro or another currency, into primary market:

 

5. Decisions on the securities issue schedules, issuance, distribution and characteristics, determination of the terms of issuance, redemption and related questions shall be taken by the Ministry of Finance, with regard to the need for borrowing on behalf of the State, the strategy of borrowing on behalf of the State and other circumstances that the Ministry of Finance deems relevant.

 

6. In the case of GS issuance by auction, the Ministry of Finance shall, before the first business day of each month, publish a preliminary three-month auction schedule on its website and shall publish the terms of issuance of GS issued by auction no later than five business days before the auction date. This notice shall specify the following terms of issuance:

 

7. The Ministry of Finance shall announce the issue volume or the yield or price limit (if it was decided to announce one of them in advance) on its website no later than one business day before the auction date.

 

8. When GS are issued by retail, the Ministry of Finance shall, before the first business day of each month, publish a preliminary three-month issue schedule for such GS, specifying the following conditions:

 

9. No later than one day prior to the start of the planned issue of such GS, the Ministry of Finance shall publish the terms of the GS issue, enumerated in paragraphs 6–8 of the Rules, on its website.

 

10. Primary distribution of GS shall be done as a private placement, if the Ministry of Finance, with regard to the condition and trends of the domestic and international financial markets, the amount to be borrowed, the interest rates and their trends at GS auctions, has determined, after questioning at least three authorised intermediaries of public securities trading, that:

 

11. In the case of GS issue by syndication or private placement, the following procedures shall apply:

 

12. Decisions on GS issuance by private placement and the terms of the GS shall be adopted by the Ministry of Finance in line with paragraph 10 of the Rules.

 

13. The GS trading technical requirements and the technical conditions for GS issuance by auction, retail, syndication or private placement and for other operations in connection with putting GS into circulation shall be established by the Ministry of Finance.

 

13¹. The terms of a GS issue with a maturity longer than one year shall include the collective action clauses related to modification of the conditions of Government securities purchased by domestic or foreign creditors. These collective action clauses, set out in Annex 1 to the Rules, form an integral part of the terms of the GS issue.

 

14. A GS issue registration account with the depository shall be opened only after payment of the GS, unless the GS terms of issuance prescribe otherwise.

 

15. GS shall be issued in a nonmaterial form. GS shall be registered with Lithuanian or foreign depositories and recorded by entries in general and personal GS accounts. GS shall be included in the trading lists of regulated market operators at the request of the Ministry of Finance or its authorised person, unless the GS terms of issuance provide otherwise.

 

16. Lithuanian and foreign natural or legal entities shall have the right to invest in GS, unless the GS terms or the legislation provide otherwise.

 

 

 

17. Secondary GS trading may be carried out on the Lithuanian and foreign stock exchanges in accordance with the procedure prescribed by those exchanges and in line with the requirements applicable to secondary trading financial instruments laid down in the legislation, both in and outside the regulated market, unless the GS terms of issuance provide otherwise.

 

18. GS transactions taking place on regulated markets shall be settled in accordance with the procedure prescribed by the depository and the operators of those regulated markets. GS transactions taking place outside regulated markets shall be settled in accordance with the procedure prescribed by the depository if settlement under the transaction is made using the services of the securities settlement system or in the manner chosen by the parties to the transaction.

 

 

 

19. The general accounting of the GS issue shall be done and the general GS accounts shall be managed by the public limited company Central Securities Depository of Lithuania or the depository of a foreign State (hereinafter together referred to as "depository").

 

20. Personal GS accounts shall be managed by intermediaries, other financial brokerage enterprises or credit institutions having the right to do so as well as by the depository (hereinafter referred to as "account managers"), in accordance with the procedure prescribed by the depositary.

 

 

 

22. The amounts of GS coupon payments and the payment dates shall be set and the accrued interest as well as the price shall be calculated under the methodology set out in Annex 2 to the Rules, except where the Ministry of Finance and the authorised intermediary(-ies) of public securities trading agree otherwise or the GS terms of issuance state otherwise.

 

23. Funds for redeemed GS and/or coupon payments shall be repaid to investors through the depository and account managers with which the investor holds a personal securities account for such GS.

 

24. The Ministry of Finance may carry out early redemption on the secondary GS market by way of an early redemption auction or through authorised intermediaries of public securities trading.  The Ministry of Finance shall select a specific method for early redemption of GS taking into account the size of temporarily idle State financial resources, the factual collection of the State budget of the Republic of Lithuania, the need for borrowing on behalf of the State, the condition and trends of the financial markets, the current prospect of State financial resources and other factors.

 

25. The procedure for early redemption of GS shall be established by the Ministry of Finance.

 

26. When adopting a decision on an early redemption auction, the Ministry of Finance shall define its conditions that shall be published on the Ministry of Finance website at least five days prior to the scheduled auction. The Ministry of Finance shall announce the issue volume or the yield or price limit (if it was decided to announce one of them in advance) on its website no later than one business day before the auction date.

 

27. GS shall be redeemed and interest paid to those investors that own GS at the end of the last business day preceding the GS redemption or GS coupon payment. If the pre-scheduled GS redemption day does not coincide with a business day, GS shall be redeemed on the first business day following the non-business days.

 

28. The Ministry of Finance and the depository shall, according to the deadlines specified in the contract, agree upon the amounts of funds that will have to be transferred to the account specified by the depository on the day of GS redemption or GS coupon payment and further paid out to investors via the accounts of the intermediaries of public securities trading representing them.

 

29. The Ministry of Finance or its authorised person shall transfer funds to the account specified by the depository at least two hours before the moment when the intermediaries of public securities trading or the persons authorised by the Ministry of Finance have to settle the GS.

 

30. Intermediaries of public securities trading shall repay the funds due to their clients on the day of GS redemption or on the day of GS coupon payment, unless their contracts with the clients provide otherwise.

 

The Ministry of Finance, its authorised person or the depository shall not be responsible for any default on the part of the intermediaries of public securities trading.

 

31. If the GS redemption date has expired and the investor has not claimed the invested funds that belong to it in time, the investor shall be entitled to the invested funds that belong to it in accordance with the procedure prescribed by the Civil Code of the Republic of Lithuania (Official Gazette, 2000, No 74-2262) and other legislation governing GS issue, trading and redemption. The GS issuer shall not calculate or pay interest on any funds that were not claimed in time, or were not received in time through the fault of a person other than the GS issuer.

 

 

32. When planning to take a loan on behalf of the State, the Ministry of Finance shall apply to potential loan providers in accordance with the procedure prescribed by paragraph 3.4 of the Rules, requesting written proposals on lending possibilities.

 

33. The Ministry of Finance can borrow from State or municipality-controlled enterprises and foreign State governments without observing the requirements laid down in paragraph 32 of the Rules.

 

34. When planning borrowing on behalf of the State by way of subscribing for Government euro commercial papers, the Ministry of Finance:

 

35. The Euro Commercial Paper Programme of the Republic of Lithuania shall set out the general conditions for subscription to Government euro commercial papers, i.e. specify the maximum amount of Government euro commercial papers in circulation at a time, the procedure for subscription, the applicable restrictions, the financial service providers under the programme and other conditions.

 

36. At the time of subscription for Government euro commercial papers, the yield of the Government euro commercial papers agreed upon with investors and other conditions of subscription for Government euro commercial papers shall be fixed in the confirmation letter of Government euro commercial papers signed by the Minister of Finance or another Government-authorised person.

 

37. The Ministry of Finance may select several proposals on the possibilities of subscribing for Government euro commercial papers and conduct negotiations with those submitting them in order to obtain more favourable terms.

 

1. The Terms of Reference for collective action related to modification of the terms of an issue (issues) of the securities of the Government of the Republic of Lithuania (hereinafter referred to as "the Terms of Reference") shall form an integral part of the Government securities issue of all Member States of the euro area. The Terms of Reference set out the general conditions governing collective action by domestic or foreign creditors having acquired securities of the Government of the Republic of Lithuania (hereinafter – "security") related to modification of the terms of a securities issue (issues) or agreement governing the issuance and administration of the securities (hereinafter referred to as "agreement"), and specify the cases and the procedure of applying these conditions.

 

2. Definitions for the purposes of the Terms of Reference:

 

3. The terms and conditions of the securities and agreement may be modified in relation to a reserved matter with the consent of the issuer and:

 

4. In the case of a cross-series modification, the terms and conditions of securities and debt securities of any other series, and of any agreement may be modified in relation to a reserved matter with the consent of the issuer and:

 

5. A separate meeting shall be called and held, or a separate written resolution signed, in relation to the proposed modification of the securities issue and the proposed modification of each other affected series of debt securities.

 

 

 

6. A proposed cross-series modification may include one or more proposed alternative modifications of the terms and conditions of each affected series of debt securities or of any agreement, provided that all such proposed alternative modifications are addressed to and may be accepted by any holder of any debt security of any affected series.

 

 

 

7. If a proposed cross-series modification is not approved in relation to a reserved matter in accordance with paragraph 4 of the Terms of Reference, but would have been so approved if the proposed modification had involved only the securities and one or more, but less than all, of the other series of debt securities affected by the proposed modification, that cross-series modification shall be deemed to have been approved, notwithstanding paragraph 4 of the Terms of Reference, in relation to the securities and debt securities of each other series whose modification would have been approved in accordance with paragraph 4 of the Terms of Reference if the proposed modification had involved only the securities and debt securities of such other series, provided that:

 

8. The terms and conditions of securities and any agreement may be modified in relation to any matter other than a reserved matter with the consent of issuer and:

 

9. In determining whether a proposed modification has been approved by the requisite principal amount of securities and debt securities of one or more other series:

 

10. In determining whether holders of the requisite nominal amount of outstanding securities have voted in favour of a proposed modification or whether a quorum is present at any meeting of security holders called to vote on a proposed modification, a security shall be deemed to be not outstanding, and may not be voted for or against a proposed modification or counted in determining whether a quorum is present, if on the record date for the proposed modification:

 

11. In determining whether holders of the requisite principal amount of outstanding debt securities of another series have voted in favour of a proposed cross-series modification or whether a quorum is present at any meeting of the holders of such debt securities called to vote on a proposed cross-series modification, an affected debt security shall be deemed to be not outstanding, and may not be voted for or against a proposed cross-series modification or counted in determining whether a quorum is present, in accordance with the applicable terms and conditions of that debt security.

 

 

 

12. For transparency purposes, the issuer shall publish promptly following the issuer’s formal announcement of any proposed modification of the securities, but in no event less than 10 days prior to the record date for the proposed modification, a list identifying each legal entity that for purposes of subparagraph 10.3 of the Terms of Reference:

 

13. Any duly approved modification of the terms and conditions of the securities may be implemented by means of a mandatory exchange or conversion of the securities for new debt securities containing the modified terms and conditions if the proposed exchange or conversion is notified to the securities holders prior to the record date for the proposed modification. Any conversion or exchange undertaken to implement a duly approved modification shall be binding on all securities holders.

 

 

 

14. Notwithstanding anything to the contrary herein, the terms and conditions of the securities or any agreement may be modified by the issuer without the consent of securities holders:

 

15. The issuer shall publish the details of any modification related to securities made pursuant to paragraph 14 of the Terms of Reference within ten days of the modification becoming legally effective, in accordance with Chapter V of the Terms of Reference.

 

 

 

16. The issuer shall appoint a person (calculation agent) to calculate whether a proposed modification has been approved by the requisite principal amount of outstanding securities and, in the case of a cross-series modification, by the requisite principal amount of outstanding debt securities of each affected series of debt securities. In the case of a cross-series modification, the same person shall be appointed as the calculation agent for the proposed modification of the securities and each other affected series of debt securities.

 

17. The issuer shall provide to the calculation agent and publish prior to the date of any meeting called to vote on a proposed modification or the date fixed by the issuer for the signing of a written resolution in relation to a proposed modification, a certificate, which, pursuant to the provisions of paragraph 9 of the Terms of Reference, where applicable, shall specify:

 

18. The calculation agent may rely on any information contained in the certificate provided by the issuer, and that information shall be conclusive and binding on the issuer and the securities holders unless:

 

19. In the event a substantiated written objection is timely delivered, any information relied on by the calculation agent will nonetheless be conclusive and binding on the issuer and affected securities holders if:

 

20. The issuer shall arrange for the publication of the results of the calculations made by the calculation agent in relation to a proposed modification promptly following the meeting called to consider that modification or, if applicable, the date fixed by the issuer for signing a written resolution in respect of that modification.

 

 

 

21. The provisions set out below, and any additional rules adopted and published by the issuer shall, to the extent consistent with the provisions set out below, apply to any meeting of securities holders called to vote on a proposed modification and to any written resolution adopted in connection with a proposed modification. Any action contemplated in Chapter IV of the Terms of Reference to be taken by the issuer may instead be taken by an agent acting on behalf of the issuer.

 

22. A meeting of securities holders:

 

23. The notice convening a meeting of securities holders shall be published by the issuer at least 21 days prior to the date of the meeting or, in the case of an adjourned meeting, at least 14 days prior to the date of the adjourned meeting. The notice shall:

 

24. The chair of any meeting of securities holders shall be appointed:

 

25. No business shall be transacted at any meeting in the absence of a quorum other than the choosing of a chair if one has not been appointed by the issuer. The quorum at any meeting at which securities holders will vote on a proposed modification of:

 

26. If a quorum is not present within 30 minutes of the time appointed for a meeting, the meeting may be adjourned for a period of not more than 42 days and not less than 14 days as determined by the chair of the meeting. The quorum for any adjourned meeting shall be one or more persons present and holding:

 

27. A written resolution signed by or on behalf of holders of the requisite majority of the securities shall be valid for all purposes as if it was a resolution passed at a meeting of securities holders duly convened and held in accordance with the Terms of Reference. A written resolution may be set out in one or more document in like form each signed by or on behalf of one or more securities holders.

 

28. Any person who is a holder of an outstanding security on the record date for a proposed modification, and any person duly appointed as a proxy by a holder of an outstanding security on the record date for a proposed modification, shall be entitled to vote on the proposed modification at a meeting of securities holders and to sign a written resolution with respect to the proposed modification.

 

29. Every proposed modification shall be submitted to a vote of the holders of outstanding securities represented at a duly called meeting or to a vote of the holders of all outstanding securities by means of a written resolution without need for a meeting A securities holder may cast votes on each proposed modification equal in number to the principal amount of the holder’s outstanding securities:

 

30. Each holder of an outstanding security may, by an instrument in writing executed on behalf of the holder and delivered to the issuer not less than 48 hours before the time fixed for a meeting of securities holders or the signing of a written resolution, appoint any person (proxy) to act on the holder's behalf in any meeting of securities holders at which the holder is entitled to vote or to sign any written resolution that the holder is entitled to sign. Appointment of a proxy pursuant to any form other than the form enclosed with the notice of the meeting shall not be valid for these purposes.

 

31. A proxy duly appointed in accordance with the above provisions shall, subject to paragraph 10 of the Terms of Reference and for so long as that appointment remains in force, be deemed to be (and the person who appointed that proxy shall be deemed not to be) the holder of the securities to which that appointment relates, and any vote cast by a proxy shall be valid notwithstanding the prior revocation or amendment of the appointment of that proxy unless the issuer has received notice or has otherwise been informed of the revocation or amendment at least 48 hours before the time fixed for the commencement of the meeting at which the proxy intends to cast its vote or, if applicable, the signing of a written resolution.

 

32. A resolution duly passed at a meeting of securities holders convened and held in accordance with these provisions, and a written resolution duly signed by the requisite majority of securities holders, shall be binding on all securities holders, whether or not the holder was present at the meeting, voted for or against the resolution or signed the written resolution.

 

33. The issuer shall without undue delay publish all duly adopted resolutions and written resolutions.

 

 

 

34. The issuer shall publish all notices and other information required to be published in the cases and in accordance with the procedure specified in the Terms of Reference:

 

35. In the case of continuing default on any obligations specified in the terms of the securities issue or agreement, the holders of no less than 25% of the aggregate principal amount of outstanding securities may, by written notice given to the issuer, declare the securities to be immediately due and redeemable^[14]. If a declaration of acceleration is properly given in accordance with the present paragraph, all amounts payable on the securities become immediately due and payable on the date that a written notice of acceleration is received by the issuer, unless the default is resolved or withdrawn prior to the receipt of the notice by the issuer.

 

36. Holders of more than 50% of the aggregate principal value of outstanding securities may, on behalf of all the holders of the securities, rescind or annul any notice of acceleration submitted under paragraph 35 of the Terms of Reference.

 

37. No securities holder will be entitled to institute legal proceedings against the issuer or take steps to enforce the rights of the securities holders under the terms and conditions of the securities, unless the trustee or fiscal agent, having become bound to proceed in accordance with these terms and conditions, has failed to do so within a reasonable time and this situation continues^[15].

 

1. Several GS coupon payments may be made for GS per year.

 

2. The coupon rate shall be fixed by rounding down to one decimal place for GS distributed domestically and to three decimal places for GS distributed on a foreign market.

 

3. If the entire GS tenor contains several GS coupon payments, the following payment dates shall apply:

 

4. The day of the final GS coupon payment must coincide with the GS redemption day.

 

5. The pre-scheduled GS coupon payment dates shall be nominal: if the scheduled date does not coincide with a business day, payment shall be due on the first business day following the non-business days.

 

6. GS coupon periods (except the first and the last ones) must be equal in tenor and may only differ due to different numbers of days in a month or year or an indivisible number of days in a year.

 

7. Interest shall be paid in equal parts for GS coupon periods of the same tenor, whether or not the nominal day of GS coupon payment coincides with a business day (for instance, 5 units (in the currency of GS denomination) will be paid semi-annually for every GS with a nominal value of 100 units (in the currency of GS denomination), the GS coupon rate of 10% and the payment frequency of two times a year).

 

8. In case of a non-standard length of the first or the last coupon periods, interest shall be paid for the actual number of days in that period, assuming that the year has p x H days (where p is the number of days in a standard period and H represents the number of GS coupon payments per year).

 

Example. The date of payment of GS is 5 April 20X1, the redemption date is 15 March 20X3, the GS coupon payment dates are March 15 and September 15, the nominal value of one security is 100 units in the currency of GS denomination, the GS coupon rate is 8% and the frequency of GS payments is twice a year. The first GS coupon period from 5 April 20X1 to 15 September 20X1 is a short one, equalling 163 days. Under this example, in the case of a standard period, where the GS payment day is 15 March 20X1, the GS coupon period will last 184 days. When making the first GS coupon payment, the amount of interest paid for one GS will be equal to 100 x 8 : 100 x 163 : (2 x 184) = 100 x 0.08 x 163 : 368 = 3.54 units of currency in which the GS were denominated.

 

Where the first GS coupon period is longer than the standard one, interest for the first part of the period shall be calculated as for the short period, while interest for the second period shall be calculated as for the standard period.

 

Example. The date of payment of the issued GS is 5 March 20X1, the redemption date is 15 March 20X3, the GS coupon payment dates are March 15 and September 15, the first GS coupon payment is on 15 September 20X1; when calculating the interest amount, the period is divided into 2 parts: from the payment date to the date of the missed GS coupon payment (March 5–15, 20X1) and from the date of the missed GS coupon payment to the first date of GS coupon payment (March 15 to September 15, 20X1).

 

If the GS issues were made prior to 30 June 20X1, the amount of interest paid when making the GS coupon payment for each GS shall be rounded of to two decimal places. If the GS issues were made after 1 July 20X1, the GS coupon payment for a single GS shall not be rounded off. The amount of the GS coupon payment transferred by the Ministry of Finance or its authorised person shall be distributed by the intermediaries of public securities trading to their clients in proportion to their GS holdings. The final amount of the GS coupon payment to an individual client shall be rounded down to a whole cent. Following this rounding, the remaining funds shall be distributed by the intermediaries of public securities trading to the client with the largest fractional residue, one cent each.

 

 

 

9. The total GS price consists of the clean price plus the accrued interest. The amount of money due to the seller for GS sold on the secondary securities market shall be equal to the clean price of the GS plus the interest accrued from the date of paying up or the nominal date of the last GS coupon payment to the date of settlement of the completed transaction.

 

10. All future GS coupon payments, beginning with the nearest one, are due to the seller. Where the settlement date coincides with the GS coupon payment date, the next payment shall be treated as the nearest GS coupon payment.

 

11. Interest shall accrue from the nominal date of GS payment or payment of the last GS coupon preceding the transaction day (inclusive) to the date of settlement of the GS (not inclusive). Calculation of the accrued interest relies on the assumption that GS coupon payment is made on the nominal date even where it is a non-business day and the actual payment is postponed under paragraph 5 of this Annex.

 

12. The accrued interest shall be calculated in respect of an exact number of days from the date of GS payment or the last GS coupon payment to the date of settlement of the GS, and a year shall be assumed to have p x H days.

 

Example. If the nominal value of a GS is 100 units (in the currency of GS denomination), the GS coupon rate is 8%, the frequency of coupon payments is twice a year, 90 days have passed from the last GS coupon payment date to the settlement date and the current coupon period is 181 days, the amount of interest accrued for 1 000 GS will be equal to 1 000 x 100 x 8/100 x 90/(2 x 181) = 1 000 x 100 x 0,08 x 90/362 = 1 988.95 units of the currency in which the GS were denominated.

 

 

 

13. The following equation is recommended for calculating the price of Government bonds:

 

 

 

, where:

 

K – the total price of Government bonds (calculated for the nominal value of one Government bond in the currency of GS denomination);

 

S_i – i^th cash flow for the nominal value of one Government bond in the currency of GS denomination (interest amount or amount payable at redemption);

 

Y – yield;

 

H – the number of GS coupon payments per year (where Government bonds have no coupons, this number is assumed to coincide with the normal number of GS coupon payments for other Government bonds);

 

N – the number of GS coupon payments remaining until the redemption of the Government bond (for bonds without coupons, the assumed number of GS coupon payments);

 

P_i – the number of GS coupon periods from the date of payment of Government bonds or settlement of purchased Government bonds to the date of the i^th cash flow payment (may be a fraction). In the event of non-standard coupon periods of a Government bond, estimation shall be made as to how many GS coupon periods there would be if all the maturities were of a standard length.

 

14. The following equation is recommended for calculating the price of Government treasury bills:

 

 

 

, where

 

K – the total price of a Government treasury bill (calculated for the nominal value of one Government treasury bill in the currency of GS denomination);

 

Y – yield;

 

d – the number of days from the date of payment of Government treasury bills or settlement of purchased Government treasury bills to the nominal date of redemption.