Rs. 34,150 Crore Notified, Final Allotments at Rs. 28,892.04 Crore
MUMBAI (India CSR): The Reserve Bank of India (RBI) conducted a large-scale auction of State Government Securities (SGS) on Tuesday, witnessing robust demand across most participating states. A total of Rs. 34,150 crore was notified, with final allotments amounting to Rs. 28,892.04 crore. While several states received oversubscription and partial allotments, Maharashtra made headlines by not accepting any bids across its four notified securities.
By rejecting high-cost bids (as in Maharashtra’s case), states are trying to manage debt prudently instead of accepting expensive borrowing. Many states (Kerala, Telangana, Rajasthan, West Bengal) successfully raised funds through 25–30 year bonds, locking in funding for the long horizon.
Assam, Goa, Gujarat, and Haryana Begin the Round
The auction opened with securities from Assam, Goa, Gujarat, and Haryana, showcasing healthy investor participation.
- Assam notified ₹450 crore for a 6-year tenure but accepted only ₹204.03 crore, with a cut-off yield of 7.13%.
- Goa, with a 12-year security, saw bids nearly 7 times its notified amount of ₹100 crore, but allotted just ₹100 crore, keeping its cut-off yield at 7.40%.
- Gujarat, notifying ₹2,000 crore, accepted nearly the entire amount, finalizing at ₹2,000 crore with a cut-off yield of 7.25%.
- Haryana, with a 14-year paper, allotted ₹1,000 crore against bids worth over ₹4,200 crore, at a cut-off yield of 7.52%.
Haryana Re-Issue and Northern States
The re-issue of Haryana SDL 2034 also saw significant activity. Out of bids worth Rs. 1,345 crore, only Rs. 1,000 crore was accepted with a cut-off yield of 7.4409%.
- Himachal Pradesh, issuing two securities of 10 years and 15 years, allotted ₹500 crore and ₹1,000 crore respectively. The yields stood at 7.27% and 7.56%.
- Jammu and Kashmir UT, with a 17-year paper, allotted ₹300 crore against bids totaling ₹753 crore, finalizing at 7.82% yield.
Kerala and Madhya Pradesh Witness Mixed Response
- Kerala had notified ₹2,000 crore for an 8-year bond but accepted only ₹988 crore. Meanwhile, its 25-year paper was fully subscribed at ₹1,000 crore.
- Madhya Pradesh, one of the largest issuers, successfully allotted ₹2,300 crore (18 years) and ₹2,500 crore (20 years), with yields close to 7.57%.
Maharashtra Accepts Nothing
In a surprising move, Maharashtra – which had notified Rs. 4,000 crore through four securities (4, 8, 9, and 10 years) – did not accept any bids. The cut-off yields and weighted averages were left unannounced, signaling either aggressive bidding by investors or a conscious choice by the state treasury to defer borrowing.
Market observers see this as a strategic decision, possibly influenced by yield expectations, liquidity management, or upcoming borrowing plans.
Odisha, Punjab, and Rajasthan Tap the Market
- Odisha, with a notified ₹1,000 crore (8 years), allotted the full amount at 7.25% yield.
- Punjab, re-issuing its 7.13% SGS 2050, allotted ₹1,500 crore against strong bids, settling at a weighted average yield of 7.60%.
- Rajasthan, with multiple tenors (10, 18, and 28 years), allotted a combined ₹4,994.93 crore, with yields ranging between 7.34% and 7.54%.
Tamil Nadu Finds Strong Subscription
- Tamil Nadu’s 4-year bond of ₹1,000 crore was nearly 4 times oversubscribed, with final allotment of ₹979.93 crore at 6.84% yield.
- Its 6-year security was allotted ₹975.99 crore at 7.00% yield, while the re-issue of its 7.09% 2035 bond attracted bids worth ₹2,120 crore, of which ₹1,000 crore was accepted.
Telangana and West Bengal Show Investor Appetite
- Telangana floated three long-term securities (26, 28, and 30 years), totaling ₹2,000 crore, all of which were accepted. The yields were steady at 7.54%.
- West Bengal issued two securities – 21-year (₹2,000 crore) and 22-year (₹1,500 crore) – successfully allotting the full amounts. Yields were slightly higher, closing at 7.65% and 7.75% respectively.
Key Takeaways
- Oversubscription trend: Total bids reached ₹94,550.90 crore against notified ₹34,150 crore, showing strong demand for state debt.
- Accepted amount lower: Final allotments were ₹28,892.04 crore, indicating selective acceptance by states.
- Yields firming up: Weighted average yields ranged mostly between 7.11% and 7.82%, reflecting rising borrowing costs.
- Maharashtra’s zero acceptance stood out as the biggest surprise.
- Long-term securities (25–30 years) saw active participation, hinting at investor appetite for stable, long-duration returns.
You Learn
Investor Confidence is High – The oversubscription reflects that institutional investors still trust SDLs as a safe investment avenue.
Borrowing Costs Are Rising – States are forced to pay 7.5%+ yields for medium-to-long-term debt, reflecting a tightening interest rate environment.
States Are Becoming Selective – By rejecting high-cost bids (as in Maharashtra’s case), states are trying to manage debt prudently instead of accepting expensive borrowing.
Shift Towards Long-Term Borrowing – Many states (Kerala, Telangana, Rajasthan, West Bengal) successfully raised funds through 25–30 year bonds, locking in funding for the long horizon.
Policy Signal for the Market – The results indicate that while states need funds, they will not compromise beyond a threshold on borrowing costs. Maharashtra’s move, in particular, may influence strategies in upcoming auctions.
State Government Securities Auction Results (August 26, 2025)
| State | Security (Maturity) | Notified Amount (₹ Cr) | Accepted Amount (₹ Cr) | Cut-off Yield |
|---|---|---|---|---|
| Assam | 2031 (6Y) | 450 | 204.03 | 7.13% |
| Goa | 2037 (12Y) | 100 | 100.00 | 7.40% |
| Gujarat | 2034 (9Y) | 2000 | 2000.00 | 7.25% |
| Haryana | 2039 (14Y) | 1000 | 1000.00 | 7.52% |
| Haryana (Re-issue) | 2034 | 1000 | 1000.00 | 7.44% |
| Himachal Pradesh | 2035 (10Y) | 500 | 500.00 | 7.27% |
| Himachal Pradesh | 2040 (15Y) | 1000 | 1000.00 | 7.56% |
| Jammu & Kashmir | 2042 (17Y) | 300 | 300.00 | 7.82% |
| Kerala | 2033 (8Y) | 2000 | 988.01 | 7.52% |
| Kerala | 2050 (25Y) | 1000 | 1000.00 | 7.58% |
| Madhya Pradesh | 2043 (18Y) | 2300 | 2300.00 | 7.57% |
| Madhya Pradesh | 2045 (20Y) | 2500 | 2500.00 | 7.57% |
| Maharashtra | 2029/33/34/35 | 4000 | 0.00 | – |
| Odisha | 2033 (8Y) | 1000 | 1000.00 | 7.25% |
| Punjab | 2050 (Re-issue) | 1500 | 1500.00 | 7.61% |
| Rajasthan | 2035 (10Y) | 2000 | 2000.00 | 7.49% |
| Rajasthan | 2043 (18Y) | 1500 | 1500.00 | 7.57% |
| Rajasthan | 2053 (28Y) | 1500 | 1500.00 | 7.54% |
| Tamil Nadu | 2029 (4Y) | 1000 | 979.93 | 6.84% |
| Tamil Nadu | 2031 (6Y) | 1000 | 975.99 | 7.00% |
| Tamil Nadu | 2035 (Re-issue) | 1000 | 1000.00 | 7.31% |
| Telangana | 2051 (26Y) | 500 | 500.00 | 7.54% |
| Telangana | 2053 (28Y) | 1000 | 1000.00 | 7.54% |
| Telangana | 2055 (30Y) | 500 | 500.00 | 7.54% |
| West Bengal | 2046 (21Y) | 2000 | 2000.00 | 7.65% |
| West Bengal | 2047 (22Y) | 1500 | 1500.00 | 7.75% |
Market Implications
The auction results signal that state governments remain active in raising market borrowings, but rising yields are prompting selective acceptance of bids.
Maharashtra’s decision not to borrow could impact its near-term financing strategy and may influence upcoming state bond issuances.
Bond dealers noted that investor appetite remains strong despite elevated yields, underlining confidence in state-backed debt instruments.
(India CSR)
