After falling marginally for two weeks, the cost of debt funds to states rose again as the weighted average cost of borrowing rose 37 basis points to a month-long high of 6.80 percent at the auction on Tuesday compared to the previous year. week.
In the weekly auction of government bonds for development cooperation, six states raised just Rs 8,000 crore, which is 41 percent lower than the declared Rs 13,600 crore, according to an analysis by ICRA Ratings, which said it was the sixth consecutive week of below-stated issuance. .
Aditi Nayar, the chief economist at the rating agency, said the spread between the 10-year government debt and the G-sec narrowed to a 24-month low of 45 bps from 51 bps last week, while the weighted average cost of their loans rose. last week by 37 bps to 6.80 percent.
Seven of the 13 states that initially said they were participating in the auction failed to raise funds, even though Telangana borrowed Rs 500 crore more than declared, she said.
According to another agency, Care Ratings, market lending by states so far in the current fiscal year is 18 percent less than in the corresponding period of FY21. As many as 29 states/UTs have so far cumulatively raised Rs 4,19,900 crore (excluding Odisha) this fiscal year, down 18.4 percent year-on-year from Rs 5,14,600 crore.
According to Care, the weighted average cost of loans, across states and terms, rose to 6.80 percent, which is a month high, while the weighted average yield of 10-year bonds was stable at 6.84 percent from previous levels. week .