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State Borrowing Costs Increase When Yields Reach 7%: Report

Mumbai: Borrowing costs move north as coupons hit their highest levels since mid-March, despite RBI’s G-Sap route liquidity injection of 10,000 rupees last week and fewer states using the bond market I am going. 7 percent.
As a result, the weighted average yield on government bonds has risen by a whopping 44bps since the first auction on April 8, according to a Care Rating analysis.
Borrowing costs across the state and maturity rose to their highest levels since mid-March, reversing the 7% decline seen at last week’s auction of state government securities. This is 24bps higher than last week. The agency pointed out.
Prior to the purchase of government bonds of 10,000 rupees in the secondary market under the G-Sap (Government Securities Acquisition Program) on June 17, the average cost at the auction on June 15 fell by 20 bps to 6.75%. It was. It will fall in a few months.
Agency Chief Economist Madanza Nabis and Senior Economist Kabitachacco believe the rise in yields is due to concerns about inflationary trajectories, as crude oil is currently trading at highs for more than two years. Strong inflation raises concerns about RBI’s ability to maintain an accommodative monetary policy stance.
Since the first auction on April 8, the weighted average yield on government bonds has risen by a whopping 44 bps to 7%. This will determine the spread between the 10-year and 10-year government bonds auctioned today. -The second yield is currently 86bps.
Spreads rose from about 50bps in early April, reflecting strong government bond yields, according to economists.
In today’s auction, 10 states raised a total of Rs 19,600. Maharashtra accepted an additional amount of Rs 50 billion, while other states accepted only the notified amount. With today’s borrowing, the state’s total borrowing so far this year is 20 percent less than in the year-ago quarter.
So far, 18 states and Delhi have raised Rs 1,23,950, but last year 22 states and Delhi raised Rs 1,55,276.
According to the provisional borrowing calendar, 26 states and Delhi were supposed to wipe out Rs 1,64,400 so far, but 19 states and Delhi have raised only 80% so far.
So far, the number of countries that are developing the market is small, and the small number of countries is due to the reduction in spending in the pandemic and the RBI by both special drawing features and higher methods and means. It is believed that this is largely due to the use of the margin provided. Priced by repo rate.



State Borrowing Costs Increase When Yields Reach 7%: Report

Source link State Borrowing Costs Increase When Yields Reach 7%: Report

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