The weighted average cost of borrowing by states edged down 6 basis points to 7.90 per cent in the latest State Development Loan (SDL) auction, as nine states collectively raised Rs 18,700 crore from the market on Tuesday.
This is 22% lower than the Rs 24,000 crore initially shown this week, according to the rating agency’s analysis
The spread between 10-year SDL and G-secs yields widened to 43 bps from 39 bps last week, despite the weighted average cutoff rate falling to 7.90% from 7.96% in the last auction.
While the benchmark 10-year G-secs yield fell to 7.37% from 7.43% last Tuesday, the weighted average cutoff for the 10-year SDL fell to 7.80% from 7.82% last week.
Yields fell slightly in part because the weighted average maturity fell to 14 years from 15 years last week.
As seven states, Maharashtra, Uttar Pradesh, Punjab, Kerala, Madhya Pradesh, Uttarakhand and Goa did not participate in the auction, although they said they would borrow Rs 98 billion this week, But overall debt sales fell 22%.Puti Bumbar