The Reserve Bank of India recently announced the results of the state government securities auction, raising a total of ₹17,900 crore across nine states and union territories. This exceeded the originally planned ₹16,900 crore, reflecting strong investor demand. The auction covered multiple tenors and yield-based bids from key borrowing states.
State Government Securities Auction: Key Details
Bihar raised ₹2,400 crore through two re-issued securities. The first carried a cut-off yield of 7.6199% for a 2035 bond, while the second fetched 7.7828% for a 2041 bond. Meanwhile, Madhya Pradesh accepted ₹2,800 crore across two tranches, with yields at 7.46% and 7.77% respectively.
Tamil Nadu raised ₹3,000 crore across three securities with tenors ranging from 7 to 15 years. Additionally, Uttar Pradesh secured ₹1,700 crore through a mix of re-issued and fresh securities. Kerala accepted ₹1,800 crore at a yield of 7.7692% for its long-dated 2049 bond.
Gujarat notably accepted ₹3,000 crore against a notified amount of ₹2,000 crore. Therefore, it exercised the greenshoe option, accepting an additional ₹500 crore each in the 9-year and 13-year securities. Delhi raised ₹1,500 crore at yields of 7.57% and 7.75% for 10-year and 15-year papers.
Himachal Pradesh and Chhattisgarh also completed their borrowings as planned. For example, Himachal Pradesh raised ₹700 crore across 18-year and 23-year bonds at yields near 7.77–7.78%.
What This Means for Investors and the Bond Market
The strong participation in this state government securities auction signals healthy appetite for sub-sovereign debt in India. As a result, states can fund their fiscal deficits at competitive rates. However, slightly elevated yields on longer-tenor bonds suggest that markets are pricing in some duration risk.
Active demand from banks and insurance companies typically drives these auctions. Additionally, re-issuances of existing securities improve liquidity in the secondary market, making them more attractive. This outcome also provides a useful benchmark for future state borrowing programs in the current fiscal year.
Overall, the auction reinforces investor confidence in state government paper as a reliable fixed-income instrument in India’s bond market.
Source: RBI Press Releases
