Eight states raise Rs 14,092 crore via state bonds at weekly auction

Eight states on Tuesday borrowed Rs 14,092 crore at the first state bond auction of the current quarter. Andhra Pradesh raised the highest amount of Rs 5,000 crore through the issuance of five bonds maturing in nine, 12, 17, 21, and 24 years. The yields on the respective bonds were set between 7.36 per cent and 7.37 per cent.

The yield spread between the 10-year government bond and state bonds stood between 34 basis points and 38 basis points.

Due to the upward revision in tax devolution and capital expenditure loans in the union budget, the overall issuance of state bonds is expected to be lower than the initially indicated Rs 2.6 trillion, according to a note by ICRA. This indicative borrowing represents a year-on-year increase of 38.5 per cent. The note also highlights that Maharashtra, West Bengal, Gujarat, and Karnataka account for nearly the entire incremental amount of Rs 73,200 crore for the quarter compared to the previous year.