The cost of borrowing in the market for states rose on Tuesday, with the average price of their bonds rising 5 basis points to 7.66%, despite withdrawing roughly half of the indicated amount. The cost of borrowing for states rose for the third consecutive week.

Eleven states raised Rs 11,900 crore through government securities (SGS) on Tuesday, 52% less than the amount shown for this week in the auction schedule.

Despite lower supply, the weighted average cut-off rose 5 basis points to 7.66% from 7.61% at the last auction. This was also despite the weighted average duration dropping from 15 years to 11 years, Icra Ratings said in a note.

The spread between the 10-year SGS and the new G-sec yield narrowed to 35 basis points from 38 basis points last week. With the lower SGS thresholds in the longer term compared to the 10-year-and-under segment, the yield curve remained inverted, the agency said.

Today’s drawdown was only 48% of the amount shown, and also 2% lower than a year ago.