State Development Loans

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.

Data compiled by the RBI showed Rajasthan topping states in borrowings as it availed of Rs 35 bn in August by way of SDLs

The borrowings of various state governments by way of State Development Loans went up 8.7 per cent in this fiscal till January end.Total borrowings by the states in this period stood at Rs 3.24 trillion compared with Rs 2.98 trillion in the same period of FY17.In terms of volume of borrowings, Maharashtra topped with Rs 366 billion followed by Tamil Nadu (Rs 342 billion) and Uttar Pradesh (Rs 338 billion), according to a study on 'Debt Market Review' by CARE Ratings.For January 2018, 27 states raised funds worth Rs 486 billion by way of State Development Loans which was 22 per cent higher than the amount raised by the states in the previous month. Average borrowing cost of states during January rose to 20-month high of 7.91 per cent. On a month-on-month basis, it moved up 0.22 per cent.With respect to central government borrowings, government securities aggregating Rs 180 billion, 53 per cent higher than the auctions held in December 2017. During April-January 2018, the central ...