State Development Loans

State borrowings via SDL become costlier as rate cut hopes fade

Government bond yields have been on the rise since the RBI’s status quo in the August monetary policy. Though the decision was in line with the market expectation, few participants expected a surprise rate cut.

Corporate bond issuance surges to 3-month high of Rs 1.05 lakh crore in December

Corporate bond issuances surged to all-time high in 2024 due to low interest rates amid higher demand from long-term investors and infrastructure bond issuances by banks. Corporates raised Rs 10.66 lakh crore in the year gone by

Spread between 10-year G-Secs and SDLs widens in September

The spread between the 10-year SDL and G-Sec stood at 37 bps on September 3 from 32 bps on April 2. Usually, whenever the spread between G-Secs and SDLs widens, it indicates a rise in state borrowings,

States' borrowing becomes cheaper by 12 bps in one month amid positive domestic cues

As per RBI’s data, between June 11 and July 9, states have borrowed Rs 52,513.88 crore through SDLs, which was 70 percent of the total Rs 74,950 crore indicated in the calendar.

RBI keeps FPIs investment limit in G-sec unchanged at 6% of outstanding stocks for FY25

Further, the aggregate limit of the notional amount of Credit Default Swaps sold by FPIs shall be 5 per cent of the outstanding stock of corporate bonds, RBI said.

Explaining government borrowing: A guide to central and state bond markets

Here’s how central and state governments procure funds to meet their fiscal needs.

States may lower market borrowings as budget proposes interest-free loans: Experts

In the Union Budget 2024, Finance Minister extended the 50-year interest free loans to state governments for another year, as part of the government's Gati Shakti master plan.

Spread between 10-year G-Secs and SDLs narrowed in last two weeks

During this period, the yields on government securities, especially the 10-year benchmark 7.18 percent 2033 bond, fell around 10 bps

States’ weighted average borrowing cost rises to highest level in FY24

So far in the October-December quarter, the amount raised by state governments is higher than the indicative amount

Yields on 10-year corporate bonds, SDL ease as liquidity conditions improve

The cut-off yield on the 10-year SDL was set at 7.44 percent during an auction on August 29, from 7.49-7.50 percent in the last two auctions on August 22 and 14, respectively.

State Development Loans-Risk is not well captured in yields

State Development Loans (SDL) are debt issued by state governments to fund their fiscal deficit. SDL issues are managed by the RBI, which also makes sure that the SDL's are serviced by monitoring escrow accounts for payment of interest and principal. Read this space to know more on this financial product