State Govt Market Borrowings

14 states, one UT raise Rs 41,200 cr, amount is 67% higher than that indicated for State Government Securities (SGS) for this week in the Q4FY23 auction calendar

Market borrowing cost for the states remained high with the average yield hitting 7.83 per cent at the auctions held on Tuesday, which is a paltry 1 basis points lower than the last auction of state securities. Seven states raised Rs 10,700 crore at Tuesday's auction of state government securities (SGS), which is just about half of the Rs 20,800 crore indicated for the week. The weighted average cut-off slipped to 7.83 per cent from 7.84 per cent last week, despite the rise in weighted average tenor to 15 years from 13, Icra said in a note. However, the yield on 10-year G-secs declined by 4 basis points (bps) to 7.40 per cent while the weighted average cut-off for 10-year state bonds slipped only by 1 bps to 7.82 per cent. Accordingly, the spread between the weighted average cut-off of 10-year state bonds and the 10-year G-sec yield rose to 42 bps from 39 bps. The reason for the massive fall in the draw-down is because big borrowers like Haryana, Karnataka, Maharashtra, Tamil Nadu,

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

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 borrowing cost for the states fell for the fourth consecutive week as the weighted average cut-off eased 6 basis points (bps) to 7.46 per cent at the weekly auctions on Tuesday. Ten states have raised Rs 10,500 crore at the latest auction of state development loans, which is 1.5 per cent higher than indicated in the borrowing calendar, a first in a couple of years. Since the outbreak of Covid, states were borrowing much lower than indicated amount thanks to higher grants from the central government. last week the Centre released Rs 58,300 crore as tax devolution for July, up from Rs 47,600 crore each in the first quarter. Additionally, the Centre had approved Rs 31,500 crore of special assistance for capital expenditure to 10 states during that month. The weighted average cut-off has eased by 6 bps to 7.46 per cent from the past week, despite the weighted average tenor increasing to 14 years from 13, and the spread between 10-year state debt and the 10-year G-Secs (Government ..

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

Cut- off for state Development Loans up by 19 bps this week over auction held last week

25 states, 1 UT have raised Rs 2.92 trn, against Rs 3.27 trn by 27 states, 2 UTs last fiscal

The states' inflated debt sale schedule alludes to that possibility. They are scheduled to borrow as much as Rs 1.78 trillion ($25 billion) from the market in the April-June quarter

This is is Rs 25,393 crore or around 3 per cent less than the indicated debt for the fiscal

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 trillion in revenue arising on account of implementation of GST

The states' market borrowings have jumped 55% to Rs 3.75 trn, or 75% of the budgeted amount, with 17 of them raising an additional Rs 22,350 crore from the latest auction of state development loans

These 13 states include Bihar, Odisha, Andhra Pradesh, Gujarat, Uttarakhand and Meghalaya

While Bihar, Gujarat, Karnataka, Tripura and Madhya Pradesh opted for the Reserve Bank of India (RBI) window, Manipur and Sikkim went for market borrowing

Centre-state GST equation to be keenly watched

The borrowing alternative offered by the Centre to make up for the shortfall in the promised compensation will lead to the states' fiscal deficits widening to 4.25 - 5.52 per cent

The finance ministry ruled out borrowing by the Centre as suggested by some states

The states were informed that if they take the option of borrowing Rs 97,000 crore under a special window, they will still get Rs 2.35 trillion minus Rs 97,000 crore from the compensation cess

This may take the general deficit of the country-- both the Centre's and states'-- to 11-14 per cent of GDP in FY21