Market Borrowings

Despite near 60 per cent more supplies, the states continued to pay more for their market borrowing with the average bond pricing rising by 7 basis points to a multi-week high of 7.68 per cent at the weekly auction on Tuesday. For the past many weeks, the yields were more or less stagnant and so was the debt-raising. Fourteen states raised a record-high Rs 32,800 crore from the market by issuing state government securities (SGS), which is a sharp 59 per cent higher than the year-ago level, even though the amount is 8 per cent lower than indicated in the auction calendar, Aditi Nayar, the chief economist & head of research at Icra Ratings said in a review note. She said the 7 bps rise in the weighted average cut-off to 7.68 per cent is due to the concerns related to monetary tightening as latest inflation numbers surprised on the downside. However, despite the all-time high borrowing and a mild increase in the weighted average tenor to 16 years from 15 years, the spread between the

Green bonds can help lower borrowing cost

Nevertheless, as a proportion of GDP, fiscal deficit is expected to ease to 5.8 per cent from 6.4 per cent

After rising steeply for a month, the cost of market borrowing for states declined sharply on Tuesday with the weighted average cut-off falling by 11 basis points to 7.72 per cent from 7.83 per cent last week. The cost declined despite a rise in the weighted average tenor to 12 years from 11 years last week, according to an analysis by Icra Ratings. Nine states raised Rs 16,900 crore through state government securities (SGS) on Tuesday -- 10 per cent lower than the Rs 18,700 crore indicated for this week in the third quarter auction calendar. So far this year, bond sales by states are down 8 per cent over the year-ago period. The weighted average cut-off of states eased by 11 bps (basis points) to 7.72 per cent despite a rise in weighted average tenor to 12 years from 11 years and the 10-year benchmark G-sec yield remaining stable at 7.43 per cent in the auction on this Tuesday from last Tuesday. The weighted average cut-off of 10-year state bonds also declined by 10 bps to 7.73 pe

The average cost of market borrowing for states rose 12 basis point to 7.77 per cent on Monday, increasing for the third consecutive week. The cost of funds has seen a cumulative hike of 31 basis points (bps) during the past three weeks. At the latest auction of debt, 10 states raised Rs 19,500 crore on Monday, drawing down the full amount indicated for this week. The weighted average cut-off of the debt rose by 12 bps to 7.77 per cent from 7.65 per cent in the last auction, despite the weighted average tenor declining to 13 years from 15 years, Aditi Nayar, chief economist at Icra Ratings, said in a note. Before the yields began to climb three weeks ago, for four successive weeks the rates had been falling and had touched a low of 7.46 per cent. She attributed the spike in the cut-off to the rise in US treasury yields and the hike in the 50 bps repo rate by the RBI last Friday. Reflecting the hardening interest rate regime, the 10-year G-secs (Government Securities) yield increas

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This will be done by giving them infrastructure status, at par with sectors to improve access to finance and enable long-term borrowing from lenders at easier terms

Actual borrowings and state-wise breakup will be intimated 2-3 days prior to auction day; RBI to try and ensure auctions are held in non-disruptive manner considering mkt conditions

Icra said a comfortable cash flow position of the state governments was due to a back-ended release of tax devolution to the states in FY2022

The government will execute the market borrowing programme in the next financial year in a non-disruptive manner without crowding out the private sector, said Economic Affairs Secretary Ajay Seth.

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The RBI, which stopped buying bonds to prevent liquidity infusion, may have to support the borrowing again

Market borrowings by the states so far is 16 per cent less than that in the corresponding period of the last fiscal

During FY21, net debt had decreased by Rs 16,131 crore to Rs 35,350 crore

The second Covid-19 wave has likely intensified the pressure points

Cash-starved states are continuing to pay higher for their market borrowings, being forced to offer yields close to 7 per cent even as system is awash with liquidity

GST Council should have addressed pressing issues

5-year govt bond yields have risen to over 50 bps since the Budget 2021 has been presented.

The market borrowing by West Bengal in the 11 months of the current fiscal rose by four per cent

Phenomenon refers to loss of revenues due to demand slowdown, coupled with higher expenditure associated with pandemic, may push the states to great strife