Yield at state govt bonds auction eases by 16 bps; 4 states raise Rs 6K cr

Four state governments on Tuesday raised Rs 6,000 crore through state government securities (SGS) during the weekly auction.

This is only a third of the indicated amount of about Rs 18,900 crore. Tuesday was the last weekly auction of April 2023.

The cut-off yield eased at the auction for state government development loans (bonds) by 16 basis points (bps) to 7.42 per cent on a sharp decline in tenor of state development loans (SDLs). 

The weighted average cut off was 7.58 per cent in the auction held on April 18, according to analysis by rating agency ICRA.

The weighted average tenor declined to nine years from 17 years during the same period.

Moreover, the spread between 10-year SGS and 7.26 per cent Government of India bond (2033 maturity) yield eased to 30 bps on Tuesday from 36 bps last week.

Andhra Pradesh raised Rs 3,000 crore through three bonds with maturities between 7 and 14 years.

Gujarat raised Rs 1,000 crore through a seven-year bond. Haryana mobilised Rs 1,000 crore through six-year bonds and Telangana mopped up the same amount through 10-year paper.