Assam, Bihar, and other state governments will auction securities worth ₹23,300 crore in face value. The auctions will follow a yield-based format with 9-year tenor for Assam and Bihar.
State Governments to Raise ₹23,300 Crore via Bond Auctions
Several state governments, including Assam and Bihar, are set to raise ₹23,300 crore through auction of securities. The Reserve Bank of India (RBI), acting as the agent, will conduct the auctions on behalf of these states. Assam and Bihar will each raise ₹1,000 crore with a tenor of 9 years, while other states collectively contribute to the remaining amount.
The auctions will be conducted on a yield basis, indicating competitive bidding where investors quote yields, and the cut-off yield is determined based on demand. These state development loans (SDLs) are key instruments through which state governments finance fiscal deficits and developmental projects. SDLs are tradable in the secondary market and are rated by credit agencies.
For banking and investment professionals, SDL auctions offer relatively safe fixed-income instruments, typically with spreads over central government securities. Monitoring state-specific fiscal health and auction demand will be critical for assessing risk-return profiles in public debt portfolios.
