Page 2 - State Borrowing

Market borrowing cost for states remains elevated at 7.83%, says Icra

Market borrowing cost for the states remained high with the average yield hitting 7.83 per cent at the auctions held on Tuesday, which is a paltry 1 basis points lower than the last auction of state securities. Seven states raised Rs 10,700 crore at Tuesday's auction of state government securities (SGS), which is just about half of the Rs 20,800 crore indicated for the week. The weighted average cut-off slipped to 7.83 per cent from 7.84 per cent last week, despite the rise in weighted average tenor to 15 years from 13, Icra said in a note. However, the yield on 10-year G-secs declined by 4 basis points (bps) to 7.40 per cent while the weighted average cut-off for 10-year state bonds slipped only by 1 bps to 7.82 per cent. Accordingly, the spread between the weighted average cut-off of 10-year state bonds and the 10-year G-sec yield rose to 42 bps from 39 bps. The reason for the massive fall in the draw-down is because big borrowers like Haryana, Karnataka, Maharashtra, Tamil Nadu,

States borrowing cost rises for third week, jumps 12 bps to 7.77%

The average cost of market borrowing for states rose 12 basis point to 7.77 per cent on Monday, increasing for the third consecutive week. The cost of funds has seen a cumulative hike of 31 basis points (bps) during the past three weeks. At the latest auction of debt, 10 states raised Rs 19,500 crore on Monday, drawing down the full amount indicated for this week. The weighted average cut-off of the debt rose by 12 bps to 7.77 per cent from 7.65 per cent in the last auction, despite the weighted average tenor declining to 13 years from 15 years, Aditi Nayar, chief economist at Icra Ratings, said in a note. Before the yields began to climb three weeks ago, for four successive weeks the rates had been falling and had touched a low of 7.46 per cent. She attributed the spike in the cut-off to the rise in US treasury yields and the hike in the 50 bps repo rate by the RBI last Friday. Reflecting the hardening interest rate regime, the 10-year G-secs (Government Securities) yield increas

States' borrowing cost eases for third week in a row, dips to 7.52%

States breathed easy in the debt market as the average cut-off on their market borrowings dipped sharply to 7.52 per cent, down 15 basis points from last week to the lowest level since mid-May. This is the third consecutive week of falling cut-off, as in the last two sessions the cost has come down by 10 basis points (bps). Last week the yield declined by 7 bps to 7.67 per cent. At the weekly auction of State Development Loans (SDLs) on Tuesday, six states raised Rs 5,900 crore, which is nearly 54 per cent lower than indicated in their borrowing calendar for the week, Icra Ratings said in a note. The weighted average cut-off eased sharply by 15 bps to 7.52 per cent at Tuesday's auctions. Similarly, there was also a decline in the weighted average tenor of the securities, the agency said. It attributed the steep fall in yields to a fall in the weighted average tenor which declined to 13 years from 15 years as also a fall in cut-off across tenors. The weighted average cut-off of the

As freebies debate rages, a look at states' contingent liabilities

The net borrowing ceiling of states is mandated by the FRBM Act. However, the upper limit of what their contingent liabilities can be is set by states' own legislative bodies

States' borrowing cost remains high at 7.86% despite fall in G-secs yield

The borrowing cost for states continues to remain elevated, sniffing at the 7.9-per cent mark for the fourth consecutive week despite the average cut-off slipping marginally by 2 bps to 7.86 per cent

RBI pegs state govt market borrowing for July-Sept at Rs 2.1 trillion

Actual borrowings and state-wise breakup will be intimated 2-3 days prior to auction day; RBI to try and ensure auctions are held in non-disruptive manner considering mkt conditions

State market borrowings down 23.7% YoY in Q1FY23 on strong cash flows

Icra said a comfortable cash flow position of the state governments was due to a back-ended release of tax devolution to the states in FY2022

States' borrowing cost up at record 7.69% despite 40% dip in bond issuances

So far this fiscal, the issuance of State Development Loan (SDL) as state debt is known, has declined 40 per cent as 10 states did not participate in the auctions conducted so far.

Centre asks officers not to furnish incorrect info about state borrowings

As per the communication sent last month, errors which are bona fide or minor will not attract any action

At 7.43%, states debt cost shoots over the roof at the last auction of FY22

According to Icra Ratings, the indicative borrowing calendar indicated 28 states and two Union territories to raise Rs 8.96 lakh crore.

Average borrowing cost for states up 54 bps so far this fiscal year

Since the beginning of the current fiscal year, states' average cost of borrowings has risen by 54 basis points to 7.11 per cent, even as it fell from the peak of 7.26 per cent two weeks ago. At the weekly auctions of state debt conducted on Monday, the weighted average cost of borrowings, across states and tenures, remained elevated but flat at 7.11 per cent. The yields on state development loans were 54 basis points higher since the start of the fiscal year, Care Ratings said in a note. At the auctions, 12 states and Jammu & Kashmir raised Rs 20,703 crore, which was Rs 1,500 crore less than the notified amount because Andhra Pradesh and Haryana did not accept any amount in the 15-year and 10-year security, respectively. Rajasthan accepted an additional amount of Rs 500 crore in the 5-year security. Five of the 18 states that had indicated their intent to borrow in the indicative calendar for market borrowings were not a part of the auction, the agency said. At the aggregate ...

States see drop in borrowing cost as bond yields soften after RBI policy

In the auctions on Tuesday, states borrowed Rs 12,100 crore from the market compared with Rs 14,200 crore last week, with most of them opting for longer-term borrowing

States borrowing cost again on a song, hits 1-month high at 6.80%

At the weekly auction of state development loans, six states raised just Rs 8,000 crore, which is 41 per cent lower than the indicated Rs 13,600 crore

More room likely for states to borrow as FM presents budget next Feb

The Centre has already begun to rejig govt savings market, reviving RBI window for retail investors, the Retail Direct Scheme this month

States' borrowing cost declines sharply to 6.81% from 7.02%

Market borrowings by the states so far is 16 per cent less than that in the corresponding period of the last fiscal

No additional borrowing by Centre to meet GST compensation in FY22

The Centre will stick to its borrowing programme for FY22 and will not tap the market for more funds to meet the GST compensation shortfall for states.

Finance ministry gives nod to 11 states to borrow additional Rs 15,721 cr

The Finance Ministry has permitted 11 states to borrow an additional amount of Rs 15,721 crore after these states achieved the capital expenditure target set for the June quarter.

Need to devise new formula for states' borrowings: SBI Economists

States are increasingly borrowing higher by making ambitious GSDP projections and hence, there is a need for a new formula to define the loan caps, economists at largest lender SBI said on Tuesday.

States' borrowing cost continue to rise, yields soar back to 7%

The yields are trading high as banks, the main investors into state debt, are concerned over the rising government debt of the Centre and the states

Ahead of Rs 10K-cr G-Sap, states see debt cost falling 20 bps to 6.75%

The weighted average cost of borrowing for the states has fallen by 20 bps over the past week to 6.75 per cent at the latest auctions.