Despite heavy supply, debt cost slips marginally for states to 7.32%

Despite larger than notified supplies, the average cost for the states that hit the market on Tuesday will be less in terms of coupons, which slipped by 3 bps to 7.32 per cent.

Twelve states have raised Rs 17,300 crore through state government securities in the auction held on Tuesday, which is a sharp 47 per cent higher than the indicated Rs 11,800 crore for this week in the auction calendar.

In spite of that, the weighted average cut-off eased by 3 bps to 7.32 per cent from the last auction. The fall is also regardless of the fact that there was a mild rise in the weighted average tenor to 16 years from 15 years, Icra Ratings said in a note.

The spread between the 10-year SGS and 10-year Central government security yield remained stable at 35 bps relative to the past week, Aditi Nayar, the chief economist and the head of research & outreach at the agency, said in the note.