Mumbai: States are shelling out more for debt funds, with the weighted average cost for their debt auctions hardening by 9 basis points to touch 7.24 per cent, the highest level so far this fiscal, during the auctions on Tuesday. Compared to the previous week, the cost has gone up by 9 basis points (bps).
From the first auctions in January, the cut-offs have been trending over 7 per cent.
The weighted average cut-off for states' 10-year debt auctions or state development loans as they are known, has hardened by 9 bps to 7.24 per cent at today's auctions as the drawdowns was 6 per cent more than indicated earlier, yet overall down by 12.3 per cent on annualised basis, Icra chief economist Aditi Nayar said in a note.
As a result, the spread between the 10-year state debt and the benchmark G-Secs widened to 61 bps today from 58 bps on last Tuesday, she said. While 12 states raised Rs 21,200 crore today, 6 per cent higher than the indicated level for this week, six of them borrowed Rs 6,700 crore more than indicated led by Uttar Pradesh. It borrowed Rs 900 crore more than the amount indicated.