24,570.053 crore rupees accepted in state securities auction, partial uptake in Punjab

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Highlights

Eight states accepted 24,570.053 crore rupees in the State Development Loan auction, slightly less than the total issue size of 24,800 crore rupees.
The yield range in the auction was 7.0383% to 7.7204%, clearly showing the difference in borrowing costs across various maturities.
Several states used re-issuance to maintain bond liquidity and familiarity while balancing their funding programs according to market demand.

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

Auction Results and State Uptake

As reported in the Reserve Bank of India press release, Andhra Pradesh, Gujarat, Maharashtra, Meghalaya, Mizoram, Rajasthan, Tamil Nadu, and Telangana accepted the full amount against their respective proposed issuances in this State Development Loan auction. The total accepted amount stood at 24,570.053 crore rupees, slightly less than the total issue size of 24,800 crore rupees.

Andhra Pradesh raised a total of 3,800 crore rupees through issuances maturing in 10 years, 2043, and 2056. Gujarat accepted 2,000 crore rupees through 9-year and 12-year papers, while Maharashtra raised a total of 10,600 crore rupees across various re-issuance series maturing from 2031 to 2054. Meghalaya accepted 300 crore rupees, Mizoram 100 crore rupees, Rajasthan 1,500 crore rupees, Tamil Nadu 2,000 crore rupees, and Telangana 2,500 crore rupees.

Punjab accepted only 770,053 crore rupees out of a 1,000 crore rupee proposal against the 7.55% SGS maturing in 2033 in one of the two re-issuances, while the full 1,000 crore rupees was raised in the 7.92% SGS re-issuance maturing in 2044. This partial acceptance led to the difference between the total issue size and the total accepted amount.

Yield Signals and Market Impact

The auction results show that the yield range across various states and maturities was approximately 7.0383% to 7.7204%, highlighting the difference in borrowing costs for short and long-term tenures. Multiple states opted for the re-issuance route, reflecting a strategy to maintain liquidity in existing State Development Loan series and manage borrowing costs through familiar market papers.

Several issuances from Maharashtra, Andhra Pradesh, Punjab, Rajasthan, and Telangana were re-issuances, including earlier bond series issued in March, April, May, June, and July 2026. This pattern indicates that state governments are raising funds according to market demand while balancing maturity profiles within existing borrowing programs.

Our previous report analyzed the RBI's daily merchant and inter-bank transaction data in the foreign exchange market during June 1–5, 2026. It highlighted banks' hedging, funding, and short-term liquidity management activities through spot, forward, and especially inter-bank swap volumes in the FCY/INR and FCY/FCY segments.

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