Bond auction: 11 states borrow Rs 22,500 crore; Maharashtra tops the list

Market borrowing by 11 state governments for this week reached Rs 22,500 crore in Tuesday’s bond auction, raising it to a sharp 62 per cent higher than the indicated Rs 13,900 crore.

At Tuesday’s auction, the cut-off yield for 10-year bonds hardened by two-three basis points (bps) at 7.35-7.37 per cent over last week, when it was 7.32-7.34 per cent, according to the Reserve Bank of India data.

The four state governments issued 10-year bonds to raise Rs 3,000 crore. Tamil Nadu raised Rs 2,000 crore, Haryana Rs 750 crore, Nagaland Rs 150 crore, and Goa Rs 100 crore.

Rating agency ICRA said the weighted average cut-off of the state government securities (SGS) increased by four bps to 7.36 per cent on Tuesday from the 7.32 per cent in the last auction, despite the decline in the weighted average tenor to 12 years from 16 years.

The spread between the 10-year SGS and 10-year Government of India security (G-sec; 7.26 GS 2033) yield remained stable at 35 bps on Tuesday relative to the last two weeks.

The Clearing Corporation of India data showed the yield on 10-year Government of India paper closed at 6.99 per cent, down from the 7.02 per cent on Monday.

Maharashtra raised the highest amount -- Rs 5,000 crore -- through two state government securities: Rs 2,500 crore (eight-year) and a similar amount through nine-year paper. Tamil Nadu raised Rs 4,000 crore.

Uttar Pradesh raised Rs 2,500 crore through 11-year paper with a coupon rate of 7.41 per cent. Telangana raised Rs 2,500 crore -- Rs 1,500 crore through 18-year paper at a coupon of 7.36 per cent and Rs 1,000 crore through 22-year paper at a coupon of 7.35 per cent.

Gujarat raised Rs 1,000 crore through five-year paper. It did not exercise the greenshoe option to raise an additional Rs 500 crore.