12 states, 1 UT raise Rs 25,800 cr at bond auction, 19% more than indicated

Spreads widens between 10-yr State & GOI bonds

The market borrowings by state governments and union territories (UTs) remained higher than indicated for the third week in a row. The 12 states and one UT mopped up Rs 25,800 crore at a bond auction today, 19 per cent higher than the amount indicated for this week in the Q3 FY2024 auction calendar, according to ICRA.

States and UTs have indicated they will raise Rs 2.37 trillion in the third quarter ending December 2023, according to Reserve Bank of India data.

At the auction, Maharashtra raised the highest amount of Rs 5,000 crore – Rs 2,500 crore through 10-year bonds with a cut-off yield of 7.71 per cent and Rs 2,500 crore via 11-year paper at a cut-off yield of 7.70 per cent. Uttar Pradesh raised Rs 4,500 crore, out of which Rs 2,500 crore was via 10-year bond at 7.73 per cent and Rs 2,000 crore through 11-year bond at 7.72 per cent. West Bengal raised Rs 2,000 crore through a 17-year bond at 7.79 per cent.

The union territory of Jammu and Kashmir raised Rs 900 crore by issuing paper with the longest tenure of 27 years. The cut-off yield for J&K’s paper was 7.58 per cent. Rajasthan raised a total of Rs 4,000 crore through bonds with maturities between 10-23 years.

The weighted average cut-off yield eased to 7.71 per cent for state government securities this week, from 7.72 per cent at auction last week. However, the spread between the cut-off yield for 10-year state bonds and 10-year Government of India paper widened to a 31-week high of 43 basis points (bps) on November 7, 2023, from 36 bps last week, ICRA data showed.