Cost of states borrowings up at 7.96 percent

Cost of states borrowings up

In light of the rising interest rate regime, sovereigns are paying more for market borrowing, with the weighted average cost of debt reaching 7.96 percent for the first time, up 7 basis points from last week.

Similarly, as many as 71 percent of bond issues in Tuesday’s weekly auction were in longer maturities of more than 10 years, pushing the weighted average to 15 years, rating agency Icra said in a note.

Nine states raised Rs 12,800 crore from state development loan auctions, 17 percent less than the stated amount, with the weighted average cut-off rising 7 basis points to 7.96 percent, but the spread between 10-year SDL and G-seconds narrowed to 39 bps from 42 bps last week as most of the auction took place in longer tenors, the agency said.

Cumulatively, 21 states have so far raised this fiscal amount by Rs 1,44,600 crore, which is nearly 23 percent less than a year ago when it was Rs 1,86,900 crore and 37 percent less than the stated amount of Rs 2,29,100 crore.

Rajasthan raised its 20-year debt to 7.98 percent, while its 16-year paper was at 8.10 percent.

Leave a Reply

Your email address will not be published.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