Four states raise Rs 5,800 crore through SDLs at bond auction

Four states raised Rs 5,800 crore through state development loans (SDL) auction — about one-fourth of the amount 15 state governments intended to raise this week.

The indicative calendar of market borrowings by states and Union Territories for April-June 2023 showed 15 states planning to raise Rs 22,500 crore in the second week of April.

The RBI announced Q1FY24 indicative SDL borrowings at Rs 2 trillion — 81 per cent higher than Q1FY23 — according to a fixed income advisory report from Nuvama Wealth Management.

Bond dealers said bond raising by state governments is slower in the early part of a fiscal year, perhaps due to better resource position.

The maturity of securities raised was up to 10 years. Of Rs 5,800 crore, Punjab, Assam and Nagaland raised Rs 2,800 crore via 10-year paper.

Punjab raised Rs 1,500 crore at cut-off yield of 7.59 per cent, Assam and Nagaland raised Rs 1,000 crore and Rs 300 crore, respectively, at cut-off yield of 7.58 per cent, according to the Reserve Bank of India (RBI) data.

Last week, the cut-off yield on 10-year state bonds was 7.71 per cent for Andhra government paper. The Monetary Policy Committee (MPC) of the RBI at its April meeting kept the policy repo rate unchanged at 6.5 per cent.

Maharashtra raised Rs 3,000 crore through two papers, Rs 500 crore more than the indicative amount. It issued a five-year bond (7.36 per cent) for Rs 1,500 crore and seven-year paper (7.49 per cent) for Rs 1,500 crore.

RBI to conduct bond auction for switch, conversion on Apr 17

The Reserve Bank of India (RBI) will conduct an auction on April 17 for conversion or switch of five central government bonds for an aggregate amount of ~11,000 crore. Some of the bonds that are intended to be converted into long-term paper include government security maturing in 2024 (7.65 per cent)  and another maturing in 2025 (8.20 per cent). 

- Abhijit Lele