Longer tenure bonds (more than 10 years) accounted for 48% of Tamil Nadu’s borrowing mix in fiscal 2022, when compared to nil borrowing in longer dated bonds in FY2018, according to ratings firm ICRA Ltd.
To bridge the gap between income and expenditure or, in other words, fiscal deficit, States including Tamil Nadu borrow from the market through the issue of bonds called State Development Loans (SDLs). In fiscal 2022, the Tamil Nadu government borrowed ₹87,000 crore. ICRA estimates the stock of Tamil Nadu’s SDLs to be at ₹4.7 lakh crore as on March 31, 2022. Of this, relatively large redemptions exceeding ₹48,000 crore are due in FY2028 and FY2031, it noted.
A considerable ₹84,400 crore or 18% of the total stock of SDLs is set to mature between FY2033-2057, ICRA said.
The ratings firm also noted there has been a marked shift in tenor-wise issuance of SDLs by Tamil Nadu, skewed towards longer tenure bonds.
This approach has elongated the weighted average maturity (WAM) of the State’s outstanding SDLs to 8.65 years at end of March 2022, higher than the average for all States of 7.48 years, Aditi Nayar, Chief Economist, ICRA Ltd., said.
In 2018, the WAM of Tamil Nadu’s outstanding SDLs was 6.63 years when compared to the average for all States of 6.83 years, she added.
As per Reserve Bank of India (RBI) data, Tamil Nadu had an outstanding liability of about ₹3.78 lakh crore as of March 2021 on SDLs. About ₹55,168 crore or 14.6% were coming up for repayment by 2023-24.
