in

States borrowing cost continues to fall for 4th week, down 6 bps to 7.46%




The borrowing cost for the states fell for the fourth consecutive week as the weighted average cut-off eased 6 basis points (bps) to 7.46 per cent at the weekly auctions on Tuesday.


Ten states have raised Rs 10,500 crore at the latest auction of state development loans, which is 1.5 per cent higher than indicated in the borrowing calendar, a first in a couple of years. Since the outbreak of Covid, states were borrowing much lower than indicated amount thanks to higher grants from the central government.


last week the Centre released Rs 58,300 crore as tax devolution for July, up from Rs 47,600 crore each in the first quarter. Additionally, the Centre had approved Rs 31,500 crore of special assistance for capital expenditure to 10 states during that month.


The weighted average cut-off has eased by 6 bps to 7.46 per cent from the past week, despite the weighted average tenor increasing to 14 years from 13, and the spread between 10-year state debt and the 10-year G-Secs (Government Securities) yield declined to 37 bps from 39 bps last week, according to an analysis by Icra Ratings.


Reflecting the declining trend, the 10-year G-secs yield declined to 7.08 per cent from 7.14 per cent last Tuesday.


Also, the weighted average cut-off of the 10-year state bonds eased to 7.45 per cent today from 7.53 per cent last week. Accordingly, the spread between the weighted average 10-year state debt and new 10-year G-Secs yield dipped to 37 bps from 39 bps.


Himachal Pradesh, Madhya Pradesh, Rajasthan and Sikkim, which had not indicated their participation in the auction, issued Rs 5,800 crore, while Goa borrowed Rs 800 crore more than indicated. In contrast, Haryana, Kerala, Meghalaya, Tamil Nadu, and Bengal did not participate in the auctions, even though they had indicated a combined borrowing of Rs 5,200 crore.

(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.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



supply hyperlink

What do you think?

Written by admin

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

India’s industrial production growth less than estimates: Morgan Stanley

India’s hiring outlook ranked second globally: ManpowerGroup report