Average cost of government debt between states plunges 27bp to 6.72%


The weighted average cost of borrowing in states plunged 27 basis points to 6.72% from the previous week, but the weighted average yield on the most traded 10-year debt remained unchanged at 6.97% .

10-year government bond yields are at their highest since mid-August and track rising G-Sec yields since late September, heightening concerns about rising global energy prices and rising US Treasury yields, Care Rating chief economist Madan Sabnavis said in a note.

The average loan price is down this time to 6.72% because the average maturity fell to 9 years at today’s auction, Icra Rating said in a briefing note.

Likewise, the spread between 10-year government loans auctioned on Tuesday, when three states raised just 5,000 crore rupees, which is down 15% from the year’s level. last, and the primary market yield of the G- at 10 years. Sec was 64bp, 4bp lower than at the start of the month, according to the Care Rating report.

So far, state market borrowing for this fiscal year is 15% lower than in the corresponding period of FY21, as only 27 states and two UTs raised 3.48 lakh crore from Rs 4 Rs 10 lakh crore borrowed by 28 states and two UTs in the same period last fiscal year.

Borrowing to date is also 11 percent lower than shown in the auction schedule for this period.

States are becoming less and less indebted in the long term because many of them have a better situation of revenue in relation to the expenditure they undertake on the one hand and, on the other hand, many are those who draw on the financial accommodations provided by the RBI by means of special design facility and advancement of upper ways and means.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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