States’ cost of borrowing slides to 7.90%
After hitting nearly 8% last week, states breathed a little easy on Tuesday as their cost of borrowing fell slightly to 7.90%.
The weighted average cost of state borrowing fell 6 basis points to 7.90% in the latest state development loan (SDL) auction as state debt is known, when nine states collected collectively Rs 18,700 crore in the markets today.
This is 22% lower than the Rs 24,000 crore originally quoted for the week.
Although the weighted average threshold fell to 7.90% from 7.96% at the last auction, the spread between 10-year SDL and G-secs yields fell to 43 basis points from 39 basis points last week.
While the benchmark 10-year G-sec yield fell to 7.37% from 7.43% last Tuesday, the 10-year SDL weighted average threshold rose to 7.80% from 7.82% last Tuesday. last week.
The marginal easing in yields is partly due to the weighted average duration falling to 14 years from 15 years last week. The overall debt sale fell by 22% as seven states – Maharashtra, Uttar Pradesh, Punjab, Kerala, Madhya Pradesh, Uttarakhand and Goa did not participate in the auction, despite indicating they would borrow 9,800 crores of rupees this week.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)