Q2 state bond calendar seen around INR 3 tln after YoY jump in Q1 issuance
This story was originally published at 16:56 IST on 27 June 2025
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NEW DELHI – States and Union territories are likely to release an indicative borrowing calendar of around INR 3.0 trillion for Jul-Sept, according to economists and market participants. This would follow up a bond issuance of INR 2.0 trillion in Apr-Jun, a jump of around 38% on year. The calendar is expected after market hours Friday.
The actual issuance size should be around 90% of the calendar, similar to the last year, market participants said. This would put the absolute issuance amount at around INR 2.7 trillion. Even if the calendar is of a larger amount, the issuance is likely to stay around INR 2.7 trillion-INR 2.8 trillion, dealers said. This would represent a rise of around 17% on year in Jul-Sept bond issuance by states.
State government typically meet the bulk of their borrowing needs in the second half of the financial year ending March. However, their borrowing is likely to increase sharply in Apr-Sept from a year ago as government spending, both at the Centre and state level, was depressed in Apr-Jun 2024 due to the ongoing General Elections.
"States would do well to frontload their issuance this year, since they are getting the 10-year at around 6.70-6.75% levels," a treasury official at a state-owned bank said. "That is what I would do if I were them--the borrowing costs and cut-offs will only increase in the second half, as the market doesn't have too much to look forward to." End
Reported by Aaryan Khanna
Edited by Akul Nishant Akhoury
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