Interest rates on state debt climbed to 7.63pc in the latest weekly auction, marking the highest cut-off in the current fiscal year. The spread between state and central bonds widened to 48 bps.
Mumbai, Dec 26 (PTI) The states continue to pay higher coupons to their debt investors, reflecting the overall hardening of the rates which jumped to 7.63 per cent at the latest weekly auctions held on Tuesday.
Accordingly, the spread between the cut-off of 10-year state bonds and Central bonds or G-secs yields widened to 48 basis points, the highest so far in the current fiscal which was 45 bps last week, Aditi Nayar, the chief economist at the rating agency Icra said.
At the weekly auctions of state government securities held on Tuesday, 11 states raised Rs 20,800 crore.
The pricing rose despite the supply being 27 per cent lower than the amount indicated for this week in the auction calendar.
According to Nayar, the states didn't draw down much as there was additional tax devolution from the Centre in the month. The weighted average cut-off increased to 7.63 per cent from 7.61 per cent last week, with the increase in the weighted average tenor to 15 years from 13 years.
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