State Development Loans

Amount higher than scheduled figure of Rs 32,532 crore, a first in seven weeks

The Reserve Bank of India (RBI) data showed that Telangana raised the highest amount of Rs 2,000 crore through two bonds

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

Yield-to-maturity between 7.36% and 7.5% for these schemes with fixed tenure makes them attractive bet

Icra said a comfortable cash flow position of the state governments was due to a back-ended release of tax devolution to the states in FY2022

This week, spread between weighted average 10-year SDL and 10-year GOI bond yield was up slightly to 37 bps from 36 bps earlier

So far this fiscal, the issuance of State Development Loan (SDL) as state debt is known, has declined 40 per cent as 10 states did not participate in the auctions conducted so far.

During Apr 1-May 2 FY2023, only Andhra Pradesh (Rs 44 billion), Maharashtra (Rs 40 billion), Punjab (Rs 25 billion) and Haryana (Rs 15 billion) raised through State Development Loans (SDL)

Cut- off for state Development Loans up by 19 bps this week over auction held last week

The West Bengal government raised Rs 10,500 crore in the first quarter of the current financial year through auctions of state securities and state development loans, as per official data

Overall, in Q3FY21, gross SDL issue was Rs 2.02 trn

It is also conducting OMO purchase auctions in SDLs

Lowest cut-off yield offered for Karnataka's 9-year bond at 6.4746%, highest for Jammu & Kashmir's 10-year SDL at 6.6813%

The weighted average cut-off for the 10-year SDLs eased by a sharper 26 bps to 6.63 per cent on October 13, 2020 over the previous weekly auction

By facilitating the OMOs, the central bank is assuming a much bigger role than earlier. Some have started comparing the RBI with European Central Bank

During April-September 2019 (H1FY20), states had raised Rs 2.25 trillion

The rise in spreads is a direct measure of market displeasure than a rise in yields. This is because if spreads widen, SDL yields could still rise even when G-sec yields remain where they are

NSE introduced trading in treasury bills (T-bills) and state development loans (SDLs) in its capital market segment

"Icra estimates the net SDL (state development loans) issuance in Q1 FY2021 to have expanded by a sharp 135.6 per cent to Rs 1.4 trillion from Rs 0.6 trillion in Q1 FY2020," it said

The Reserve Bank of India (RBI) in its various measures to encourage retail participation has extended access to primary auctions to SDLs.