Business Standard

States borrow a record Rs 32,800 crore, cost jumps by 7 bps to 7.68%

Fourteen states raised a record-high Rs 32,800 crore from the market by issuing state government securities (SGS), which is a sharp 59 per cent higher than the year-ago level

States borrow a record Rs 32,800 crore, cost jumps by 7 bps to 7.68%

Press Trust of India Mumbai
Despite near 60 per cent more supplies, the states continued to pay more for their market borrowing with the average bond pricing rising by 7 basis points to a multi-week high of 7.68 per cent at the weekly auction on Tuesday.
For the past many weeks, the yields were more or less stagnant and so was the debt-raising.
Fourteen states raised a record-high Rs 32,800 crore from the market by issuing state government securities (SGS), which is a sharp 59 per cent higher than the year-ago level, even though the amount is 8 per cent lower than indicated in the auction calendar, Aditi Nayar, the chief economist & head of research at Icra Ratings said in a review note.
She said the 7 bps rise in the weighted average cut-off to 7.68 per cent is due to the concerns related to monetary tightening as latest inflation numbers surprised on the downside.
However, despite the all-time high borrowing and a mild increase in the weighted average tenor to 16 years from 15 years, the spread between the 10-year SGS and yield came down to 29 bps from 31 bps last week, she said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Feb 28 2023 | 6:55 PM IST

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