Update on State

8 states raised a total of Rs.11,550 crores at the auction of state government securities or state development loans (SDLs) held
Government today, which was Rs.1,000 crores more than the notified amount of the auction as 2 states –Tamil Nadu and Telangana exercised

Borrowings the over-allotment (green –shoe) option and accepted Rs.500 crores each more than the auction amount.

So far in the current fiscal year (7 April – 18 August’20), 26 states and 1 UT have cumulatively raised Rs.2.56 lakhs crores via
18 August, 2020 market borrowings, which is a 59% increase from the borrowings in the corresponding period of 2019-20 (Rs. 1.61 lakh crores
from 9 April- 20 Aug’19). As per the proposed market borrowings calendar, the state government borrowings in H1 2020-21 at Rs.
Contact:
3.45 lakh crores is likely to be 53% more than that in H1 2019-20.
Madan Sabnavis
Chief Economist
Table 1: Auction of State Development Loans of State Governments: 18 August’20
madan.sabnavis@careratings.com
91-22-68374433 Amount
Notified Cut Off
State Raised (Rs Tenure (Yrs)
Amount (Rs Crs) Yield (%)
Crs)
Author: Bihar 2000 2000 4.93 3
Kavita Chacko Goa 100 100 6.50 10
Senior Economist Haryana 2000 2000 6.68 19
kavita.chacko@careratings.com 1000 1000 6.50 10
Karnataka
91-22-68374426 1000 1000 6.64 12
Re-issue of 6.65% Punjab SDL 2050
Punjab 750 750 6.67
Mradul Mishra (Media issued on July 08, 2020
Rajasthan 700 700 6.50 10
Contact) Tamil 1000 1250 6.50 10
mradul.mishra@careratings.com Nadu 1000 1250 6.67 30
91-22-68374424 Telangana 1000 1500 6.69 30
Source: RBI
Disclaimer: This report is prepared by CARE Ratings
Ltd. CARE Ratings has taken utmost care to ensure State-wise market borrowings so far in 2020-21
accuracy and objectivity while developing this report
based on information available in public domain.
However, neither the accuracy nor completeness of The market borrowings of state governments through the issue of SDLs has seen a marked increase in the current financial year
information contained in this report is guaranteed. with state’s increasingly resorting to such borrowings to meet their funding shortfalls consequent to the steep decline in their
CARE Ratings is not responsible for any errors or
omissions in analysis/inferences/views or for results revenues due to the lockdown of the last 5 months. Of the 26 states that have issued SDLs so far in the financial year, 15 states
obtained from the use of information contained in this have seen a notable increase (ranging from a 20% to 467%) in their issuances or market borrowings when compared with the
report and especially states that CARE Ratings has no
financial liability whatsoever to the user of this report. same period of year ago. The market borrowings of 6 states has been more than double the borrowings during the Apr- mid
Aug’19.
Tamil Nadu, Maharashtra, Andhra Pradesh, Rajasthan, Telangana, Karnataka, West Bengal, Haryana and Kerala are amongst the
largest borrowers so far in 2020-21 and these 9 states have accounted for nearly 80% of total borrowings. The borrowings of 8
states has been lower than year ago. These include Uttar Pradesh, Punjab, Bihar, Arunachal Pradesh, Manipur, Uttrakhand,
Meghlaya and Himachal Pradesh. Jharkhand and Tripura have not raised funds via market borrowings so far in 2020-21.

Table 2: State-wise market borrowings

FY 20 (9 April- 20 Aug FY 21 (7 April- 18 Aug
% change
'19) Rs crs '20) Rs crs
Andhra Pradesh 15,078 24,000 59
Arunachal Pradesh 472 428 -9
Assam 1000 1,000 0
Bihar 6,600 6,000 -9
Chhattisgarh 1,300 NA
Goa 800 1,000 25
Gujarat 12,000 12,280 2
Haryana 8,501 14,000 65
Himachal Pradesh 1,600 500 -69
Jammu & Kashmir 2,749 3,300 20
Jharkhand 1,500 NA
Karnataka 3,000 17,000 467
Kerala 10,229 12,930 26
Madhya Pradesh 6,000 9,000 50
Maharashtra 12,500 34,500 176
Manipur 803 700 -13
Meghalaya 350 200 -43
Mizoram 258 310 20
Nagaland 100 350 250
Odisha 2,000 3,000 50
Punjab 10,420 7,700 -26
Rajasthan 14,382 22,950 60
Sikkim 213 467 119
Tamil Nadu 18,615 42,250 127
Telangana 11,800 18,461 56
Tripura 450 NA
Uttar Pradesh 10,000 6,500 -35
Uttarakhand 1,300 1,000 -23
West Bengal 9,010 15,500 72
Source: RBI and CARE Ratings
 Tenure and Interest Rate of State Government Dated Securities

 Although the 10 year securities account for the largest share of issuance across states (36% of total issuance), states have also been
seen to be tapping the lower as well as longer end of the tenure range. The 3 year tenure SDLs have the second highest share of
issuances (10% of total) followed by the 30 year SDLs (8%).
 The weighted average interest rate of state government dated securities (across states and tenures) auctioned on 18 August’20 at
6.33% was 7 bps higher than of week ago (11 August’20).
 The yields of the 10 year SDLs (weighted average) in today’s auction hardened by 3 bps to 6.50% from week ago. The 10 year SDL
yields have fallen by 140 bps since the start of the financial year (7 April’20).
 The yields (weighted average) of the 3 year SDLs have fallen by 142 bps since early April’20 while than of the 30 year SDLs has
declined by 47 bps from late April’20.
 The spread of 10 year SDL and GSec (based on the latest auction on 14 August’20) stands at 54 bps. The spread between these 2
securities has narrowed by 46 bps since mid-May’20.

Chart 1: Market Borrowings and Yield

Chart 2 : Yield Movement of 10 year SDLs
9
7.90
35,000 7.74 9

Weighted Average Yield (%)

Weighted Average Yield: %

8 6.79
6.82 6.51 8 6.60 6.47
30,000 7 6.44 6.42 6.50
6.12 6.25 6.25
5.90 6.02 6.436.33 7
25,000 5.97 5.67 6
6
6.25
Rs. Crs

20,000 5 5
15,000 4 4
3 3
10,000
2 2
5,000 1
0 0 1
0
07-Apr-20

21-Apr-20

05-May-20

19-May-20

02-Jun-20

16-Jun-20

30-Jun-20

11-Aug-20
14-Jul-20

28-Jul-20

02-Jun-20

16-Jun-20

30-Jun-20
07-Apr-20

21-Apr-20

05-May-20

19-May-20

11-Aug-20
14-Jul-20

28-Jul-20
Amount Raised : Rs Crs Weighted Average Yield

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