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In a surprising turn during the latest round of state government securities (SGS) auctions conducted by the Reserve Bank of India (RBI), the state of Maharashtra has opted not to accept any amount in the re-issue of its 7.17% SGS maturing in 2054. The bond, originally issued on August 6, 2025, was part of a ₹31,650 crore aggregate auction scheduled for September 2, 2025, across multiple states.
This decision comes despite Maharashtra’s inclusion in the RBI’s auction list with a notified re-issue amount of ₹750 crore for the 7.17% SGS 2054. The move has raised eyebrows among market participants, given the state’s historically active role in long-tenor borrowing and its robust fiscal footprint.
What Happened at the Auction?
The RBI’s auction, conducted via its Core Banking Solution (E-Kuber) platform, included re-issues and fresh issuances from over a dozen states. Maharashtra had four securities listed for re-issue:
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₹750 crore of 7.08% SGS 2039
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₹750 crore of 7.04% SGS 2040
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₹750 crore of 7.17% SGS 2054
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₹750 crore of 7.16% SGS 2055
While the other securities saw participation, the 7.17% SGS 2054 re-issue was notably left untouched. The RBI confirmed that Maharashtra did not accept any bids for this particular tranche, effectively withdrawing it from the auction outcome.
Understanding SGS Re-Issues
A re-issue of SGS involves the sale of additional units of an existing bond, allowing states to raise funds without creating new securities. This method helps maintain liquidity and price discovery in the secondary market. The 7.17% SGS 2054, originally issued in early August, was expected to attract long-term institutional investors due to its 29-year maturity and relatively high coupon rate.
However, Maharashtra’s decision to decline all bids suggests either a mismatch in yield expectations or a strategic shift in its borrowing calendar.
Possible Reasons Behind the Rejection
While no official statement has been released by the Maharashtra government, analysts speculate several potential factors:
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Yield Expectations: The bids may have demanded higher yields than the state was willing to accept, making the cost of borrowing unattractive.
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Cash Flow Position: Maharashtra may have reassessed its immediate funding needs and opted to defer long-tenor borrowing.
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Market Sentiment: Recent volatility in the bond market, driven by global rate uncertainty and domestic inflation concerns, may have influenced the state’s decision.
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Strategic Timing: The state could be waiting for more favorable market conditions or planning a larger issuance later in the fiscal year.
Broader Auction Landscape
Despite Maharashtra’s withdrawal from the 7.17% SGS 2054 re-issue, the overall auction saw active participation from other states. Tamil Nadu, Telangana, Bihar, and Kerala were among the top issuers, with tenors ranging from 2 to 38 years. The RBI allotted up to 10% of each stock to eligible individuals and institutions under the non-competitive bidding scheme, promoting retail investor participation2.
The auction was conducted smoothly, with bids submitted electronically between 10:30 AM and 11:30 AM. In case of technical issues, RBI had contingency plans for physical bid submission through its Public Debt Office.
Implications for Investors and Policymakers
Maharashtra’s decision may signal a more cautious approach to long-term debt amid shifting macroeconomic conditions. For investors, it underscores the importance of yield dynamics and issuer discretion in SGS auctions. For policymakers, it highlights the need for flexible borrowing strategies that align with fiscal realities and market sentiment.
The move also raises questions about future re-issues of the 7.17% SGS 2054. Will Maharashtra revisit this security in upcoming auctions, or will it pivot to shorter tenors and alternative instruments?
Sources: RBI Official Press Release on SGS Auction, PublicNow, ABP Live
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