3 states, 1 UT raise Rs 5.6K crore in bond auction, TN tops the list

Yields on 10-year state paper harden further

Three states and one Union Territory (UT) on Tuesday raised Rs. 5,600 crore through auction for state government securities against Rs. 22,500 crore raised by 11 states last week.

This week, the amount raised by four states was also much less than Rs. 18,000 crore, indicated in the auction calendar for this week.

According to Reserve Bank of India (RBI) data, Tamil Nadu raised the highest amount — Rs. 4,000 crore through two bonds.

Out of this, Rs. 2,000 crore was through a 20-year paper with cut-off yield of 7.34 per cent. And, Rs. 2,000 crore was through a 10-year paper with a cut-off yield of 7.39 per cent.

Bank of Baroda (BoB), in a research note, said the cut-off yield for 10-year paper was higher at 7.39 per cent versus 7.35-7.37 per cent last week. During the same period, the yield on 10-year government of India bonds increased by 6 basis points (bps) to 7.06 per cent.

More than anticipated, the hawkish tone of US Federal Reserve (Fed) and RBI has impacted the yield movement, also leading to steepening of the yield curve for the state government paper, BoB added.

Apart from Tamil Nadu, Jammu & Kashmir issued a 12-year paper at 7.36 per cent yield to raise Rs. 500 crore. Mizoram floated a 15-year paper at 7.36 per cent yield for Rs. 100 crore.

Andhra Pradesh raised Rs. 1,000 crore through two instruments —17-year at 7.35 per cent for Rs. 500 crore and 9-year at 7.40 per cent for a similar amount, RBI data showed.

In FY24 (till June 20), states have borrowed Rs. 3.83 trillion, higher than the Rs. 3.53 trillion raised during the same period last year.