Twenty-seven state governments and two Union Territories, excluding Tripura, have raised Rs 10.7 trillion state government securities (SGS) in FY2025, said a recent report by rating agency firm ICRA.
Notably, this is 6.6 per cent higher than the Rs. 10.1 trillion issued in FY2024.
However, the actual SGS issuances in FY2025 were a massive Rs. 2.4 trillion below the indicated amount, amid a shortfall in all the months, except August and March.
The SGS issuances in both March 2024 and 2025 exceeded the planned amount by a considerable degree.
The report highlighted that the weighted average cut-off (WAC) of the SGS dipped by 32 basis points (bps) in FY2025 to 7.20 per cent from 7.52 per cent in FY2024, exceeding the 25-bps repo cut in February 2025.
Among the sample states, the WAC of SGS issued by Karnataka declined by 50 bps to 7.10 per cent while that of Andhra Pradesh, Kerala, Punjab, and Telangana eased by a lower 21-24 bps to 7.22-7.33 per cent in FY2025.
Nearly two-thirds of the SGS issuances in FY2025 were in the longer tenors, in line with the previous year (~63 per cent) and a significant increase from FY2020 (~25 per cent).
The weighted average maturity (WAM) of SGS issued during FY2025 was nearly unchanged at 14 years in line with the previous two years.
Another report has highlighted that the gap between yields on India’s state bonds and federal government bonds rose to over 50 basis points, the highest in more than a year, while that between corporate debt and federal debt jumped to as much as 90 basis points.
During the quarter, the Centre has sold Rs 2.79 trillion of notes while states raised Rs 4.34 trillion. Corporations sold more than Rs 3 trillion in debt.