The Reserve Bank of India has released the results of the latest state government securities auction. Thirteen states participated in this yield and price-based auction. Together, they raised a total of ₹30,005 crore against a target of ₹31,200 crore.
Key Details of the State Government Securities Auction
Tamil Nadu emerged as the largest borrower in this round. The state raised ₹7,000 crore across three tenors — 20, 25, and 30 years — with cut-off yields ranging from 8.14% to 8.21%. West Bengal also raised a significant ₹5,400 crore across multiple securities. Additionally, Haryana borrowed ₹2,500 crore through re-issues of existing bonds.
However, not all states met their full targets. Assam accepted only ₹805 crore against its ₹1,000 crore target for the 11-year security. Meanwhile, Gujarat did not accept any amount in its 12-year security, though it successfully raised ₹1,000 crore in the 9-year tenor at a cut-off yield of 7.96%.
Karnataka raised ₹2,000 crore at 8.03% for a 10-year tenor. Keralam raised ₹1,000 crore at a lower yield of 7.92% for 6 years. Uttar Pradesh borrowed ₹3,500 crore across two securities, while Uttarakhand raised ₹1,500 crore across three different tenors.
What This Means for Investors and the Bond Market
State government securities, also known as SDLs, are important instruments for fixed-income investors in India. Therefore, the cut-off yields from this auction serve as key benchmarks for the short-term bond market. Most yields in this auction clustered between 7.85% and 8.21%, reflecting current market conditions.
Re-issues dominated this state government securities auction. States like Bihar, Chhattisgarh, Haryana, Mizoram, Odisha, and West Bengal all tapped existing bond lines. As a result, liquidity in those specific securities is likely to improve on the secondary market.
For example, Bihar re-issued two bonds — the 7.71% SGS 2044 and the 7.76% SGS 2051 — raising ₹1,000 crore each. Odisha, additionally, re-issued two bonds totalling ₹1,000 crore at yields of 7.85% and 8.17% respectively. These auctions help states manage their fiscal deficits efficiently while offering investors relatively safe, government-backed returns.
Source: RBI Press Releases
