State governments raise Rs20,600 crore in this week's auction
Premium- According to data from Reserve Bank of India, Rs9,100 crore or 44% of the total debt was issued in 11-35 years tenors and Rs8,500 crore or 41% was issued in the 10-year bucket
Twelve state governments and one Union Territory (UT) on Monday raised Rs. 20,600 crore through state government bonds, nearly 49% higher than the indicated level of Rs. 13,900 crore for this week.
According to data from Reserve bank of India, compiled by Care Ratings, Rs. 9100 crore or 44% of the total debt was issued in 11-35-year tenors and Rs. 8500 crore or 41% was issued in the 10-year bucket. The balance Rs. 3000 crore or 15% of the total issuance was in 5-7 year papers issued by two states. The weighted average cut-off of the 10-year SDLs stood at 6.92%, 6 bps higher than 6.86% last week.
In the last week’ auction the borrowing cost for state governments rose to the highest level of 7% since March this year. The yields rose owing to concerns over the inflation trajectory with crude oil prices touching two year high. Firming inflation had raised concerns over the RBI’s ability to maintain its accommodative monetary policy stance.
In the first quarter, the gross state development loan issuance stood at ₹1,44,600 crore, nearly 19% lower than the Rs. 1,78,300 that had been indicated by the RBI in the market borrowing calendar of states for this quarter.
“The second wave of the pandemic has led to the reimposition of lockdown across states since the start of the current financial year, resulting in the loss of economic output and thereby income for the government. This in turn would have adverse implications on the revenue collections of the state government. As such, states are expected to resort to market borrowings to meet the shortfall in revenues in FY22," said the rating agency.
MINT PREMIUM
See All
Never miss a story! Stay connected and informed with Mint. Download our App Now!!