The first tranche of market loans to be brought out by 25 state governments for 1997-98 will be issued on April 30 for an aggregate amount of Rs 2,500 crore. The coupon rate on these loans will be 13.05 per cent. Interest will be paid half-yearly on October 30 and April 30 each year. The bonds are redeemable at par on April 30 2007. The largest beneficiaries of this loan would be the state governments of West Bengal, Andhra Pradesh and Maharashtra. While West Bengal will mop up Rs 260 crore, Andhra Pradesh and Maharashtra are expected to mop up Rs 250 crore and Rs 248.79 crore respectively.
There has been a decrease in the yields on long-dated paper. The last issue of state government loans was at a coupon rate of 13.75 per cent which was issued at the beginning of the year. The RBI recently fixed the yields of 10 year government paper at 13.56 per cent. This has been followed by an all round drop in yields of government securities including the latest 10 year paper issued at 13.05 per cent as compared to the earlier 10 year central government paper which was issued at 13.65 per cent.