In the latest debt auction, 10 states raised Rs 19,500 crore on Monday, drawing from the total amount shown for this week.
The weighted average debt cutoff rose 12 basis points to 7.77% from 7.65% at the last auction, despite the weighted average duration falling to 13 years from 15 years, Aditi said. Nayar, chief economist at Icra Ratings, in a note.
Before yields started to climb three weeks ago, for four straight weeks, rates had fallen and hit a low of 7.46%.
She attributed the rise in the cutoff to higher US Treasury yields and the RBI’s 50 basis point hike in the repo rate last Friday. Reflecting the tightening of the interest rate regime, the yield on 10-year G-secs (government securities) rose to 7.47% from 7.29% last Tuesday.
Similarly, the weighted average cutoff for 10-year government bonds rose 13 basis points to 7.79% from 7.67% last week. As a result, the spread between the weighted average 10-year government debt and the yield on G-secs narrowed to 32 basis points, from 38 basis points over the same period.
At Monday’s auction, Rs 8,900 crore or 46% of the total issue was in longer tenors and Rs 6,600 crore or 34% was in the 10-year tranche. The balance of Rs 4,000 crore or 21% was raised by Maharashtra in the form of eight-year debt.
Punjab borrowed Rs 400 crore over 20 years at 7.7%, while Kerala raised Rs 400 crore over 25 years at 7.7%, which was below the 7.79% weighted average threshold of the duration of 10 years. .
