Now Reading: States raise Rs 15,300 crore via bond auctions on August 11
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States raise Rs 15,300 crore via bond auctions on August 11
The Reserve Bank of India conducted an auction of State Government Securities on August 11, raising a total of Rs 15,300 crore across seven states. Andhra Pradesh, Gujarat, Maharashtra, Meghalaya, Punjab, and…
The Story in Brief
The Reserve Bank of India conducted an auction of State Government Securities on August 11, raising a total of Rs 15,300 crore across seven states. Andhra Pradesh, Gujarat, Maharashtra, Meghalaya, Punjab, and Rajasthan all successfully met their notified amounts. The weighted average cut-off yields ranged from 7.35% for a Gujarat 2035 bond to 7.65% for a 17-year Punjab security.
Separately, the Government of India announced a conversion or switch auction for August 17, involving up to Rs 30,000 crore in face value. The operation will allow holders of nine specified source securities, maturing between 2027 and 2030, to exchange them for longer-dated destination securities, such as the 7.19% GS 2060 bond. Bids must be submitted on the RBI's e-Kuber platform.
The Indian Opinion
The bond data shows state governments having little trouble borrowing at yields near 7.4-7.6%, while the Centre's switch auction aims to ease its own refinancing burden by swapping shorter debt for longer paper. The lazy narrative that government borrowing is 'crowding out' private investment ignores that these are routine operations in a deep market. The real test will come on August 17: will enough bondholders accept the offered spread between short and long rates to make the switch substantial? That number will tell whether the market thinks the yield curve is steep enough.
Sources (3): rbi.org.in, rbi.org.in (2), rbi.org.in (3)
This story was synthesised by AI from the 3 sources linked above.
Updated: this story now draws on 3 sources.
