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Key Points

The RBI conducted a successful state government securities auction, raising Rs 8,450 crore with yields ranging from 6.43% to 7.43%. Bihar secured the highest yield at 7.43% for a 30-year bond, while Maharashtra dominated the auction with Rs 4,000 crore raised. Haryana’s reissued bond attracted the lowest yield at 6.4377%. The RBI confirmed full subscription, indicating strong market demand for state debt.

Key Points: RBI Auctions Rs 8,450 Crore State Bonds with Yields Up to 7.43%

  • Bihar raises Rs 2,000 crore at highest yield of 7.43%
  • Maharashtra dominates with Rs 4,000 crore across four tranches
  • Haryana's reissued bond fetches lowest yield at 6.4377%
  • RBI confirms full subscription for all state securities
2 min read

RBI conducts Rs 8,450 crore state government securities auction; cut-off yields between 6.43% and 7.43%

RBI's latest state securities auction sees Bihar, Telangana, and Maharashtra raising funds at yields between 6.43% and 7.43%.

"The notified amounts for all states and UTs were fully accepted, reflecting robust demand. – RBI"

Mumbai, August 12

The Reserve Bank of India (RBI) on Tuesday announced the results of its latest yield and price-based auction of State Government Securities (SGS), raising a total of Rs 8,450 crore from various states and Union Territories. The cut-off yields in the auction ranged from 6.4377 per cent to 7.43 per cent.

According to the RBI release, Bihar mobilised the highest notified amount in the auction with a Rs 2,000 crore issue carrying a cut-off yield of 7.43 per cent for a 30-year tenor. Telangana followed with a Rs 1,000 crore borrowing for a 35-year tenor at a cut-off yield of 7.33 per cent.

Goa raised Rs 100 crore at a yield of 7.12 per cent for an 11-year tenor, while Jammu and Kashmir garnered Rs 350 crore at a yield of 7.35 per cent for 15 years.

Haryana's Rs 1,000 crore issue was a re-issue of the 8.62 per cent Haryana SDL 2028 bond, originally floated on September 3, 2018, and fetched a cut-off price of Rs 105.96, translating to a yield of 6.4377 per cent.

Maharashtra accounted for the bulk of re-issues in the auction, cumulatively raising Rs 4,000 crore through four separate tranches.

These included, Rs 1,000 crore of 7.14 per cent SGS 2045, re-issued at Rs 98.07 with a yield of 7.3248 per cent.

Second was of Rs 1,000 crore of 7.14 per cent SGS 2046, re-issued at Rs 98.11 with a yield of 7.3170 per cent.

Third auction of Rs 1,000 crore of 7.17 per cent SGS 2054, re-issued at Rs 97.07 with a yield of 7.4171 per cent.

While last Rs 1,000 crore of 7.16 per cent SGS 2055, re-issued at Rs 96.92 with a yield of 7.4173 per cent.

The RBI release suggests that the notified amounts for all states and UTs in the auction were fully accepted, reflecting robust demand from the market participants.

State Development Loans (SDLs), are issued by the State Governments to fund their fiscal deficit. Each state can borrow up to a set limit. These securities carry similar risk profiles to central government securities but generally offer higher yields, making them more attractive to institutional investors seeking better returns.

The RBI, acting as the debt manager for state governments, conducts these auctions under its regular borrowing calendar.

- ANI

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Reader Comments

P
Priya S
Interesting to see Maharashtra raising so much (₹4000cr!). But yields around 7.4% seem high compared to central govt bonds. Are investors seeing more risk in states? RBI should monitor this closely.
R
Rohit P
As a small investor, I wish retail investors could participate in these SDL auctions directly. The yields are much better than FD rates these days! RBI should consider this option.
S
Sarah B
The difference between Goa's 7.12% (11yr) and Bihar's 7.43% (30yr) shows how investors price risk. Smaller states with better fiscal management get better rates. Important lesson for all state governments!
K
Karthik V
While the auction success is good news, I'm concerned about rising state debts. ₹8,450cr is just one auction - multiply this across states and quarters. Who will repay all this? Future taxpayers like us 😔
N
Nisha Z
Haryana's 6.43% yield shows their strong credit profile. But why is Jammu & Kashmir paying 7.35%? RBI should ensure fair access to capital for all states, especially those needing development boost.
D
David E
The transparency in these auctions is commendable. Detailed yield and price data helps market participants make informed decisions. More emerging economies should adopt

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