States raised Rs 30,005 crore against Rs 31,200 crore in the RBI auction
Only a portion of the total borrowing target was accepted in the latest auction of Indian state securities, reflecting differences in demand and pricing across maturities. Assam partially accepted bids for its 11-year security, while Gujarat accepted no bids for its 12-year security.
Highlights
- State governments raised Rs 30,005 crore against Rs 31,200 crore in the RBI auction, reflecting partial acceptance.
- Yields on several reissued securities ranged from 7.85% to 8.19%, reflecting current market pricing.
- Tamil Nadu, West Bengal and Uttarakhand recorded successful acceptance in long-term securities with maturities of 20 to 30 years, indicating selective demand.
This article was translated from the original. Read the original version by our correspondent here.
Market signals on state borrowing
According to the Reserve Bank of India (Reserve Bank of India), these results indicate that investor demand for state government market borrowings is varying based on maturity, coupon structure, and the availability of reissued securities. In states that accepted the full amount, bid coverage and pricing were relatively favourable, while borrowing terms appeared less favourable for securities with partial or zero acceptance.Yields on several reissued securities ranged from around 7.85% to 8.19%, indicating current pricing in the state development loan market. Successful acceptance by states such as Tamil Nadu, West Bengal and Uttarakhand in longer-term securities, particularly offerings with maturities of 20 to 30 years, shows that selective demand remains for long-dated paper as well.
In our previous report on the states' Q3 FY2027 SGS market borrowing plan, it was stated that, according to the RBI's auction calendar, gross issuance is estimated at Rs 3.6 lakh crore and net issuance after redemptions at Rs 2.3 lakh crore. The article also noted that Maharashtra, West Bengal and Haryana made a major contribution to additional gross borrowing, while several states/Union Territories indicated plans to standardise issuance by adopting the Benchmark Issuance Strategy (BIS).
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