The average market borrowing cost for states rose 12 basis points to 7.77 percent on Monday, rising for the third week in a row. The cost of funds has seen a cumulative increase of 31 basis points (bps) over the past three weeks.
In the latest debt auction, 10 states raised Rs 19,500 crore on Monday, exhausting the entire amount indicated for the week.
The weighted average debt ceiling rose 12 basis points to 7.77 percent from 7.65 percent in the last auction, despite the weighted average maturity declining to 13 years from 15 years, said Aditi Nayar, chief economist at Icra Ratings. Note.
Before yields started rising three weeks ago, rates had fallen for four straight weeks, touching a low of 7.46 percent.
She attributed the rise in the cut-off to rising US Treasury yields and a 50-basis point hike in the repo rate by the RBI last Friday. As a result of the tightening interest rate regime, the yield on 10-year G-sec (government securities) rose to 7.47 percent from 7.29 percent last Tuesday.
In Monday’s auction, Rs 8,900 crore, or 46 percent of the total issue was in longer maturities and Rs 6,600 crore, or 34 percent was in the 10-year segment. The balance of Rs 4,000 crore or 21 percent of Maharashtra raised as eight-year debt.
Punjab borrowed Rs 400 crore over 20 years at 7.7 percent, while Kerala raised Rs 400 crore over 25 years at 7.7 percent, which was lower than the weighted average closing rate of 7.79 percent over 10 years.