Seven state governments and one Union Territory (UT) raised Rs. 241 billion through state government securities (SGS) on June 2, 2026, largely in line with the indicated amount in the Q1 FY2027 auction calendar. The actual issuance by states that had adopted the Benchmark Issuance Strategy (BIS) was in line with their indicated amounts for this auction. In contrast, four non-BIS states – Goa, Haryana, Himachal Pradesh and West Bengal– had indicated a borrowing of Rs. 51 billion on June 2, 2026, but did not participate in the auction. Additionally, Tamil Nadu under-borrowed by Rs. 5 billion. In contrast, Punjab raised an additional Rs. 25 billion through SGS. Moreover, Gujarat and Jammu and Kashmir borrowed Rs. 30 billion, even though they had not indicated their participation in this auction.

In the auction held on June 2, 2026, ~82% of the total issuance was in longer tenors, ~10% in the shorter tenors and the balance 8% in the 10-year bucket. The weighted average tenor of all SGS increased to 17 years in this auction from 15 years last week. The weighted average SGS cut-off rose by 2 bps to 7.83% in the auction held on June 2, 2026, from 7.81% last week. The new benchmark 10-year G-sec (06.94 GS 2036) yield inched up to 7.00% on June 2, 2026 from 6.98% last Tuesday. However, during the same period, the weighted average cut-off of 10-year SGS eased to 7.72% from 7.78%. Accordingly, the spread between them narrowed to 72 bps on June 2, 2026 from 81 bps last week.

EXHIBIT: Indicated and actual SGS issuances in Q1 FY2027 so far

Source: RBI, ICRA Research