A total of ₹21,350 crore was accepted through the latest State Government Securities (SGS) auction in the borrowing activity of Indian states and union territories. This issue included new securities and re-issuances from several borrowers including Bihar, Telangana, Uttar Pradesh, and West Bengal.
Highlights
- State governments raised the entire announced amount in the RBI SGS auction with a final bid of ₹21,350 crore.
- West Bengal undertook the largest borrowing program with a total of ₹4,700 crore, and Uttar Pradesh with ₹3,000 crore.
- Yields on new securities ranged between 7.07% and 7.64%, while demand for re-issues and long-term bonds remained strong.
This article was translated from the original. Read the original version by our correspondent here.
Auction Results and Borrowing Structure
According to the Reserve Bank of India press release, bids worth ₹21,350 crore were accepted in the yield or price-based auction of state government securities, matching the announced mobilization amount. Several states issued securities of varying maturities, while some re-issued previously floated bonds.Bihar raised ₹800 crore and ₹1,200 crore, with the second tranche as a re-issue of 7.92% Bihar SGS 2051. Jammu & Kashmir raised ₹500 crore through a new security and re-issued ₹500 crore of 7.91% SGS 2046, while Madhya Pradesh issued an 18-year security for ₹1,600 crore and re-issued ₹2,000 crore of 7.90% SGS 2056. Telangana re-issued ₹1,500 crore of 7.97% SGS 2043 and ₹1,500 crore of 8.07% SGS 2056.
Uttar Pradesh raised a total of ₹3,000 crore in three tranches, including re-issues with 6-year, 16-year, and 2051 maturities. West Bengal accepted a total of ₹4,700 crore through securities of 5, 18, and 26 years, making it one of the largest borrowing programs in this auction.
States' Funding Costs and Market Signals
The auction results show that states' borrowing costs vary according to maturity and credit demand. Yields on new securities broadly ranged from 7.07% to 7.64%, while some re-issued bonds were accepted at price-based cut-offs.Approvals for Kerala, Jharkhand, Chhattisgarh, Himachal Pradesh, Manipur, Sikkim, Uttarakhand, and other borrowers also matched the full announced amount, indicating robust demand in the auction. The preference for long-term bonds by states, especially re-issues maturing in 18 years, 26 years, and up to 2056, shows that long-term funding remains active in the sub-sovereign market.
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