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States & Union Territories (UTs) seem to be in a tearing hurry to raise monies before the close of FY24. This also comes in the backdrop of expectations that the Election Commission will announce general election dates shortly.
Seventeen States & UTs are expected to cumulatively mop up ₹50,206 crore at an auction of State Government Securities (SGS) to be conducted by RBI on March 19.
The amount that the States & UTs are collectively seeking to raise on March 19th is substantially higher than the ₹27,810 crore they had planned to mop up, going by the Indicative Calendar of Market borrowings.
The amount that States and UTs are planning to raise on March 19th will also be the highest amount that they have raised at a weekly auction in FY24 so far. Twenty States and UTs had collectively raised ₹45,160 crore (the second highest amount raised in FY24) on February 27.
Venkatakrishnan Srinivasan, Founder & Managing Partner, Rockfort Fincap LLP, said such a large weekly SGS auction size has not been witnessed before.
States & UTs usually raise ₹35,000-Rs 37,000 crore, thereabouts at the weekly auctions conducted by RBI.
Latest auction
The latest auction announcement also comes in the backdrop of the expected announcement of general election dates on Saturday.
Meanwhile, the RBI conducted a variable rate repo (VRR) auction on Friday after a gap of eight days to infuse liquidity into the banking system amidst outflows expected due to direct and indirect tax payments.
RBI received bids from Banks for drawing 7-day funds aggregating ₹76,560 crore against the notified amount of ₹75,000 crore. It allotted funds amounting to ₹75,001 crore at a weighted average rate of 6.65 per cent.
Yield of the 10-year Government Security (7.18 per cent GS 2033) moved up about two basis points, with its price declining about 17 paise, in sync with rising US Treasury yields.
Yield of this benchmark paper closed at 7.0644 per cent (previous close: 7.0401per cent), with its price closing at ₹100.775 (Rs 100.9425).
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