Despite the ₹10,000-crore liquidity infusion through the G-Sap route by the RBI last week and fewer States tapping the bond markets, their cost of borrowing has been heading north, as the coupon hit the highest level since mid-March at 7%.
With this, the weighted average yields of State bonds have risen by a whopping 44 bps since the first auction of the fiscal on April 8, according to Care Ratings. Ahead of the ₹10,000-crore purchase of State debt on June 17, the average cost had fallen 20 bps to 6.75% at the auction on June 15.
