State Bond Auctions Reflect Mixed Demand As Tamil Nadu Skips 15-Year SDL

In the latest round of SDL auctions conducted by the Reserve Bank of India (RBI), nine states collectively mobilized ₹155.60 billion—below the targeted ₹165.60 billion—indicating cautious investor appetite amid tight liquidity conditions. Tamil Nadu notably refrained from accepting any bids for its 15-year SDL, despite an implicit yield of 7.1100 percent.

The auction results highlight the nuanced borrowing strategies of states and the evolving yield landscape across tenors.

Major Takeaways From The SDL Auction:  
- Tamil Nadu did not accept any amount for its 15-year SDL reissue at 7.1100 percent yield  
- Chhattisgarh SDLs:  
  - 6.59% maturing in 2028 at 6.3876 percent yield  
  - 7.14% maturing in 2033 at 7.1408 percent yield  
- Uttar Pradesh SDLs:  
  - 11-year bond cut-off at 7.24 percent  
  - 7-year bond cut-off at 7.02 percent  
- Maharashtra SDLs:  
  - 12-year bond cut-off at 7.25 percent  
  - 8-year bond cut-off at 7.07 percent  
- Madhya Pradesh SDLs:  
  - 16, 18, and 19-year bonds cut-off between 7.45 and 7.46 percent  
- Jammu and Kashmir, Mizoram, Bihar, and Telangana SDLs saw cut-offs ranging from 7.14 to 7.46 percent

The divergence in yields reflects tenor-specific demand and credit perceptions, with longer-duration bonds attracting higher premiums.

Sources: Reserve Bank of India, CCIL SDL Bulletin, Economic Times Markets