States raise Rs 20,100 cr through bond auction, Andhra Pradesh largest borrower, Tamil Nadu secures lowest yield
Mumbai, May 19
State governments collectively raised Rs 20,100 crore through the latest auction of State Government Securities, with the entire notified amount being accepted by the Reserve Bank of India.
According to the RBI's "Result of Yield/Price Based Auction of State Government Securities" released on Tuesday, six states participated in the auction: Andhra Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu and Telangana.
Among all participating states, Andhra Pradesh emerged as the largest borrower by raising a total of Rs 4,600 crore across multiple maturities, including 8-year, 16-year and 30-year securities.
The state raised Rs 1,000 crore through re-issue of 7.63 per cent Andhra Pradesh SGS 2034 at a yield of 7.8086 per cent. It further raised Rs 1,800 crore through re-issue of 7.79 per cent Andhra Pradesh SGS 2042 at a yield of 7.9082 per cent and another Rs 1,800 crore through re-issue of 7.81 per cent Andhra Pradesh SGS 2056 at a yield of 7.9073 per cent.
Maharashtra was the second-largest borrower in the auction, raising a total of Rs 4,000 crore through three securities. The state borrowed Rs 800 crore through re-issue of Maharashtra SGS 2034 at a yield of 7.7695 per cent, Rs 1,600 crore through Maharashtra SGS 2044 at 7.9090 per cent and another Rs 1,600 crore through Maharashtra SGS 2054 at 7.9179 per cent.
Punjab raised Rs 2,500 crore through three securities with maturities and Rajasthan also borrowed Rs 4,000 crore.
Tamil Nadu raised a total of Rs 3,000 crore through three securities and secured the lowest borrowing cost among all states in the auction.
Tamil Nadu's 2032 paper cleared at a yield of 7.6687 per cent, which was the lowest yield recorded in the auction. The state raised Rs 1,000 crore through the re-issue of 7.50 per cent Tamil Nadu SGS 2032.
Tamil Nadu also raised another Rs 1,000 crore through re-issue of 7.73 per cent Tamil Nadu SGS 2036 at a yield of 7.8082 per cent and Rs 1,000 crore through re-issue of 7.80 per cent Tamil Nadu SGS 2041 at a yield of 7.8085 per cent.
Telangana raised Rs 2,000 crore through three securities maturing in 2033, 2037 and 2047. The state borrowed at yields ranging from 7.7484 per cent to 7.9176 per cent.
The RBI statement showed that the total notified amount of Rs 20,100 crore was fully accepted in the auction, reflecting adequate investor demand for state government bonds despite elevated interest rate conditions.
State government securities are bonds issued by state governments to raise funds for infrastructure projects, development expenditure and other fiscal requirements. The yields in these auctions indicate the borrowing cost for states and are closely tracked by market participants for signals on liquidity and investor sentiment in the bond market.
— ANI
Reader Comments
Every state is borrowing at 7.8-7.9% yield, which is quite high for state government bonds. Eventually this interest burden will fall on taxpayers. States need to improve their own revenue generation instead of running to bond markets every month. Just my observation.
Interesting that Tamil Nadu managed the lowest yield at 7.6687% for their 2032 paper. Their financial discipline is showing. Meanwhile Maharashtra raised ₹4,000 crore at similar rates but with longer maturities. Every state has different needs I suppose. Hope these funds build better roads, schools and hospitals across all states. 🙏
The RBI fully accepting all ₹20,100 crore shows there's appetite for state bonds even in high interest rate environment. But I'm concerned about Punjab borrowing ₹2,500 crore given their fiscal situation. Hope the state is using this money productively and not just for revenue expenditure. Fiscal federalism is good but so is responsibility!
As someone who works in finance, these state bond auctions are a key indicator of sub-national fiscal health. The 30-year paper from Andhra at 7.9% is particularly interesting for long-term investors. Good to see transparency from RBI on these results.
Telangana borrowing at yields from 7.74% to 7.91% shows the market is assessing different risks for different maturities. But why only 6 states participated? Others should also tap this market rather than piling up on central loans. State governments need to become more self-reliant financially. Just my thoughts. 🤔
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