Despite a sharp 40 percent drop in bond issues, states have had to pay more for their market loans as the weighted average interest rate at recent government securities auctions has reached a record 7.69 percent.
So far, this fiscal, public development loan (SDL) issue, as known public debt, has shrunk by 40 percent as 10 states have not participated in auctions held so far.
However, at auctions held on Tuesday, the volume of issues was 7 percent higher than stated. After four consecutive weeks behind the indicative level, it is the largest weekly auction so far in fiscal year 23, according to a note from Icra Ratings.
As noted in the note, at auctions held on Tuesday, the weighted average performance increased by a whopping 34 basis points (basis points) to 7.69 percent over last week, with rising frontiers over 10 years of SDL and G-Sec at 46 bps.
Andhra Pradesh paid a whopping 7.76 per cent for its 10-year money, reflecting restrictions on approval at various times, despite lowering the weighted average term to 11 years from 13 years over the same period. It was the first 10-year document issued by any state in this fiscal.
The 10-year G-Sec’s reference yield rose 18 basis points to 7.30 from 7.12 percent last Monday) after RBI increase in the repo rate by 40 bp to 4.40 percent on May 4th.
The four states borrowed 10,000 crore on Tuesday, which is 700 rupees more than the total amount shown and 7 per cent above the 9,300 rupees originally listed on the auction calendar.
The payout was higher as Haryana (Rs 1,500 crore) and Punjab (Rs 500 crore) participated in the auctions, even if they had not shown their participation this week earlier.
Two states borrowed more than indicated: Maharashtra sold 3,000 crore more than indicated, and Andhra Pradesh sold 2,000 crore more than the amount indicated in the auction calendar.
In contrast, eight states did not participate in the auction at all, although they initially stated that they would borrow Rs 6,300.
However, today’s issue was 17.7 per cent lower than the 12,200 crore rupees borrowed by the states last year.
In total, the four states collected Rs 22,400 crore in this fiscal, which is almost 40 per cent less than the Rs 37,200 crore issued by the 13 states / UT for the same period last year.