States' borrowing cost surges 7.56% to 23-week high at first weekly debt auction of Q3: Report
PTI. As per details, 14 states raised ₹22,500 crore through the issuance of state government securities. This was in line with the indicated amount for this weekly auction for the third quarter calendar. Chief economist at Icra Ratings, Aditi Nayar pointed out that the auctions saw a steep surge in the cut-offs across tenors leading to the weighted average cost jumping to a 23-week high of 7.56 percent.
Earlier last week, it stood at 7.46 percent. Adding more, Nayar said the higher pricing of the borrowing is despite a steep decline in the weighted average tenor to 13 years from 17 years. ALSO READ: Government to meet its tax collection target for FY24: SBICaps She said the spread between the cut-off of 10-year state bonds and the new 10-year G-Secs (7.18 GS 2033) yield rose mildly to 33 bps from 32 bps last week.
Looking at the data, the states have drawn down 15.4 percent more on an annualised basis to the week compared to what they had drawn in the same period last fiscal at ₹19,500 crore. Cumulatively, the states have raised ₹3,80,500 crore from the debt market so far in FY2023-24, which is 28.6 percent more than what they had raised in the same period last fiscal, as per Icra Ratings. Meanwhile, the Indian government's tax mop-up will likely meet budget estimates for fiscal year (FY) 2024, with the expected shortfall in excise duty revenue offset by higher income tax collection, SBI Capital Markets Ltd.
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