With increase in adoption of BIS to 26 states, actaual SGS issuance in Q3 could be close the indicated level
The Reserve Bank of India (RBI) has indicated the issuance of gross State Government Securities (SGS) at Rs. 3.6 trillion in Q3 FY2027 in the auction calendar released by it on October 1, 2026. This is a sharp 25.9% higher than the Rs. 2.9 trillion raised by states in Q3 FY2026. With redemptions estimated at Rs. 1.3 trillion, the net SGS issuance in Q3 FY2027 stand at Rs. 2.3 trillion, reflecting a substantial YoY increase of 26.8%. The incremental gross borrowing of Rs. 742 billion in Q3 FY2027 is mainly driven by Maharashtra (Rs. 198 billion), West Bengal (WB; Rs. 183 billion) and Haryana (Rs. 135 billion), which together account for nearly 70% of the increase in this quarter.
Seven additional states/UTs, namely Assam, Goa, Haryana, Mizoram, Nagaland, Tripura and Jammu & Kashmir have adopted the Benchmark Issuance Strategy (BIS) in Q3 FY2027. The total number of states/UTs that will now be following the BIS, stands at 26. These states/UTs have indicated borrowings of Rs. 2.8 trillion in Q3 FY2027, accounting for 77% of the quarter’s planned issuances. Recent trends suggest that actual borrowings by BIS participants would remain broadly aligned with the indicated amounts. Notably, the initial nine BIS participants raised Rs. 3.31 trillion in H1 FY2027 against an indicated Rs. 3.26 trillion, while the 10 states/UTs that joined in Q2 FY2027 raised Rs. 593 billion, equivalent to 92% of the indicated Rs. 641 billion. Among the major non-BIS borrowers, Tamil Nadu (TN), Karnataka and Gujarat have indicated SGS issuances of Rs. 480 billion, Rs. 200 billion and Rs. 150 billion, respectively. Based on the past trends, we expect these three states’ actual borrowing in Q3 FY2027 to be close to the indicated levels.
ICRA has retained its FY2027 gross SGS issuance estimate at Rs. 13.4-14.0 trillion. Assuming Q3 FY2027 issuances are broadly in line with the auction calendar, the gross SGS issuances in Q4 FY2027 are projected at Rs. 4.8-5.4 trillion, compared with Rs. 5.2 trillion in Q4 FY2026 and net issuances in Q4 FY2027 at Rs. 3.4-4.0 trillion, versus Rs. 4.0 trillion in Q4 FY2026.
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