States' borrowing cost falls to nine-week low of 7.73%

Mumbai: For the first time in many weeks, the average weighted cost of states' borrowing declined to a nine-week low of 7.73 per cent on Tuesday, witnessing a sharp 17 basis point fall from previous week.

Since the beginning of this fiscal year, states have been paying much higher for their market borrowings with the average yields sniffing at the 8-percentage-mark for many weeks.

But with falling international crude prices as well as the fall in the US yields last week, yields on central government bonds have also dropped this week.

Reflecting this, the average weighted cost of states' borrowings declined and hit a nine-week low of 7.73 per cent on Tuesday, steeply down by 17 basis points (bps) from 7.90 per cent in the previous week across tenors, Aditi Nayar, chief economist at Icra Ratings, said in a note.

Yields on the benchmark 10-year G-secs (government securities) maturing in 2032 also declined by 17 bps to 7.20 per cent on Tuesday from 7.37 per cent last Tuesday, benefitting primarily from the fall in US treasury yields and crude prices.