The Reserve Bank of India (RBI) on July 29 announced the results of the latest auction of State Government Securities (SGS), where twelve states collectively raised Rs 27,719.05 crore against a notified amount of Rs 30,000 crore. The funds were mobilised through a combination of fresh issuances and re-issuances of existing bonds, with yields ranging from 6.14% to 7.28% depending on the tenor and demand.
Assam tapped the market for Rs 500 crore, securing a competitive 6.76% yield over seven years. Haryana, demonstrating a strategic split in its debt profile, issued two tranches of Rs 1,000 crore each. The state opted for 14- and 15-year maturities, accepting yields of 7.06% and 7.15% respectively.
Himachal Pradesh faced tepid demand for its 22-year security, accepting only Rs 719 crore of the Rs 1,000 crore offered, but managed a yield of 7.28%, the higher end among the day's results, reflecting the longer maturity's inherent risk and investor expectations.
Kerala participated robustly, raising Rs 2,000 crore for 26 years at a 7.17% yield. Madhya Pradesh followed with Rs 2,000 crore at 7.23% for 17 years but opted not to accept any bids for its separately notified 23-year issuance, perhaps reflecting price sensitivity or a lower risk appetite among bidders.
Re-issuances were actively tapped by Maharashtra, Rajasthan, Tamil Nadu, and Telangana, with yields on these securities generally crossing the 7% mark. Maharashtra, for instance, stood out by issuing four tranches, each of Rs 1,000 crore, across maturities stretching from 2037 to 2040. The yields for these ranged between 7.02% and 7.16%.
Odisha played a dual strategy, raising Rs 500 crore at a relatively low yield of 6.49% for five years and an additional Rs 1,000 crore at 7.16% for a much longer 25-year term. Punjab decided on a single, longer-dated Rs 2,500 crore issue at 7.19% for 15 years, while Rajasthan’s broad borrowing plan included multiple tranches. Its yields ranged from 6.94% (10-year) to 7.15% (28-year), encompassing both new and re-issued securities and indicating a flexible borrowing framework.
Tamil Nadu’s participation was marked by both short- and long-term strategies. The state raised Rs 1,000 crore at just 6.14% for three years, one of the lowest yields in the auction, while also arranging longer-term funds through re-issues at yields up to 7.16% for maturities extending to 2055.
Telangana diversified its borrowing as well, issuing multiple re-issues in Rs 500 crore and Rs 1,000 crore sizes, with yields clustering around 7.13% to 7.17% for ultra-long tenors between 2053 and 2063.
Lastly, Uttarakhand raised Rs 1,000 crore for a 10-year maturity at 6.97%, aligning itself with the mid-range yields among the day’s offerings.
The proceeds from these borrowings will be used to fund various developmental and fiscal requirements of the states. The cut-off yields reflect prevailing market appetite and are closely watched as indicators of borrowing costs in the public debt market.