Cut-off yields ease by 7-8 bps at State bond auction as borrowings taper

[ad_1]


The yields on 10-year (SDL) at Tuesday’s auction eased by 7-8 basis points while amounts raised by state governments continued to be lower than the indicative calendar.


Last week, the cut-off yields at conducted had hardened by 5-6 basis points. It was the first auction after the central bank’s half a percentage point increase in the repo rate to 4.90 per cent.


RBI data showed the cut-off yield for 10-year SDL at 7.86-88 per cent as against 7.94-95 per cent on June 14, 2022. This week, the spread between the weighted average 10-year SDL and 10-year increased mildly to 37 bps from 36 bps earlier.


Six states raised Rs 6,500 crore through SDLs on June 21, 2022, nearly 60 per cent lower than the indicated amount for this week. Eight states did not participate today, though they had indicated that they would borrow a substantial Rs 9,600 crore in this week’s auction calendar, according to rating agency Icra.


Additionally, Andhra Pradesh and Tamil Nadu each borrowed Rs 1,000 crore less SDLs today, compared to the amount indicated for this week. In contrast, Assam and Rajasthan together borrowed additional Rs 1,400 crore and Mizoram and Nagaland raised Rs. Rs 500 crore SDLs even though they had not indicated to participate in today’s weekly auction.


Overall, the SDL issuance has trailed the indicated amount in eight of the 12 weekly auctions held in Q1 FY2023. The total Rs 90,700 crore raised by 16 state governments/Union Territory (UT) raised so far in Q1 FY2023, is nearly 47 per cent lower than the indicated Rs. 1.7 trillion. On a Year-on-Year basis, the borrowings are 26.8 per cent lower than the year-ago level (Rs 1.24 trillion), according to Icra.

mail Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



[ad_2]

Source link

Leave a Reply

Your email address will not be published.