States raised ₹14,800 crore in RBI auction

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RBI auction: States raised ₹14,800 crore

Highlights

All bids for the entire amount of ₹14,800 crore were accepted in the Reserve Bank of India's state government securities auction.
In long-term reissues, yields were recorded around or above 7.8%, while in short-term papers, yields remained relatively lower.
The acceptance of bids for all offered amounts indicated that there is sufficient demand in the market for state government borrowing.

This article was translated from the original. Read the original version by our correspondent here.

Auction Results and Borrowing Structure

Reserve Bank of India’s press release states that bids totaling ₹14,800 crore were accepted in the yield or price-based auction of state government securities, matching the notified amount. The release is attributed to Ajit Prasad, Deputy General Manager, Communications, and issued as Press Release 2026-2027/418.

Bihar raised ₹1,600 crore through the re-issuance of 7.92% Bihar SGS maturing in 2051, with a cut-off price of ₹101.20 and a yield of 7.8084%. Chhattisgarh raised ₹500 crore and ₹500 crore through two re-issuances maturing in 2031 and 2040, with cut-off prices and yields of ₹100.76, 7.1782% and ₹99.99, 7.8293%, respectively.

Gujarat raised ₹1,500 crore and ₹1,000 crore for 11-year and 14-year tenors, with cut-off yields of 7.63% and 7.70%. Jammu & Kashmir raised ₹500 crore for a 25-year tenor at 7.81%, while Uttar Pradesh raised ₹700 crore and ₹1,000 crore for 12-year and 20-year tenors at 7.74% and 7.82%.

Kerala raised ₹400 crore, ₹1,000 crore, and ₹1,400 crore through three re-issuances maturing in 2033, 2037, and 2042, with cut-off prices and yields of ₹100.36, 7.5289%; ₹100.43, 7.7485%; and ₹100.27, 7.8282%. Tamil Nadu raised ₹1,000 crore, ₹1,000 crore, and ₹500 crore through re-issuances maturing in 2033, 2036, and 2041, with yields of 7.4399%, 7.6309%, and 7.7495%, respectively.

Madhya Pradesh raised ₹1,200 crore and ₹600 crore through re-issuances maturing in 2042 and 2056, with cut-off prices and yields of ₹100.28, 7.8271% and ₹101.21, 7.7936%. Manipur raised ₹300 crore for a 16-year tenor at 7.79%, and Mizoram raised ₹100 crore for a 15-year tenor at 7.79%.

States’ Borrowing Costs and Market Signals

The auction results show that states raised funds from the market at varying costs across short, medium, and long-term securities. Yields were relatively lower for shorter tenors, while longer-term and far-maturity re-issuances saw yields around or above 7.8%.

The acceptance of the entire proposed amount indicates sufficient market demand for states’ borrowing needs. Additionally, the yield differentials across states and tenors highlight that investors are pricing based on tenor, coupon, and re-issuance structure.

The previous report discussed the Government of India’s borrowing program and financing risks for FY27, noting that despite tensions in West Asia, there appears to be no need to increase borrowing given adequate domestic financial resources. The same coverage mentioned a downward revision in RBI’s FY27 growth estimate and an increase in the inflation forecast, with crude oil prices and a weak monsoon cited as key risks.

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