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State Govt Market Borrowings
Union Home Minister Amit Shah on Saturday said the central government can't help the states which empty their treasuries after making unrealistic election promises. All states should prepare their budget taking into account development programmes and social welfare commitments, he said at an event here when asked about the allegation of discrimination against some states in the release funds by the Centre. The governments of West Bengal, Kerala and Karnataka recently held protests in the national capital alleging that they were not given their due share of funds, a charge refuted by the finance minister. Shah said in the white paper, tabled in Lok Sabha, Finance Minister Nirmala Sitharaman has given details about the funds given to the states. "The white paper has details of how much funds we have given to the states, how much more funds we have given than what Congress used to give to every state - be it BJP or opposition ruled," he said at the ET NOW Global Business Summit 2024.
The borrowing cost of states declined to an 18-month low at 7.48 percent at the latest auction held on Tuesday. Since the first auction of the fourth quarter held on January 2, the average cut off of state government bond auctions was sniffing at a shade less than 7.8 per cent, which was a two-year high. At the latest auction held on Tuesday, 14 states raised Rs 26,700 crore which was 22 per cent lower than the indicated Rs 34,400 crore for this week in the fourth quarter auction calendar, according to data shared by rating agency Icra. The lower supply was partly on account of the upward revision in tax devolution in the revised estimates for FY24 by the Centre in the interim Budget. This may reduce the borrowing requirements of some of the states in the remainder of the fourth quarter of this fiscal. Reflecting the lower-than-indicated borrowing on Tuesday, the spread between the cut-off of the 10-year state debt and the 10-year G-Sec yield eased to 41 basis points from 49 basis
Lower-than-indicated supply of state government securities on Tuesday led to an 8 basis point fall in the borrowing cost, reducing it to a five-week low of weighted average cut-off at 7.36 per cent. As many as nine states raised Rs 12,400 crore, which was 26 per cent lower than the amount indicated in the auction calendar, from the market at an average rate of 7.36 per cent, down from 7.43 per cent in the last weekly auction. With the weighted average cut-off falling by 8 bps to 7.36 per cent, the spread between the cut-off of 10-year state debt and the G-sec yield declined to 29 bps from 33 bps last week, Icra Ratings said in a note. The fall in cut-off is also due to the dip in the tenor to 13 years from 14 years, tightening the clustered yields and inversion in parts of the yield curve.
Market borrowing cost for the states remained high with the average yield hitting 7.83 per cent at the auctions held on Tuesday, which is a paltry 1 basis points lower than the last auction of state securities. Seven states raised Rs 10,700 crore at Tuesday's auction of state government securities (SGS), which is just about half of the Rs 20,800 crore indicated for the week. The weighted average cut-off slipped to 7.83 per cent from 7.84 per cent last week, despite the rise in weighted average tenor to 15 years from 13, Icra said in a note. However, the yield on 10-year G-secs declined by 4 basis points (bps) to 7.40 per cent while the weighted average cut-off for 10-year state bonds slipped only by 1 bps to 7.82 per cent. Accordingly, the spread between the weighted average cut-off of 10-year state bonds and the 10-year G-sec yield rose to 42 bps from 39 bps. The reason for the massive fall in the draw-down is because big borrowers like Haryana, Karnataka, Maharashtra, Tamil Nadu,
After rising steeply for a month, the cost of market borrowing for states declined sharply on Tuesday with the weighted average cut-off falling by 11 basis points to 7.72 per cent from 7.83 per cent last week. The cost declined despite a rise in the weighted average tenor to 12 years from 11 years last week, according to an analysis by Icra Ratings. Nine states raised Rs 16,900 crore through state government securities (SGS) on Tuesday -- 10 per cent lower than the Rs 18,700 crore indicated for this week in the third quarter auction calendar. So far this year, bond sales by states are down 8 per cent over the year-ago period. The weighted average cut-off of states eased by 11 bps (basis points) to 7.72 per cent despite a rise in weighted average tenor to 12 years from 11 years and the 10-year benchmark G-sec yield remaining stable at 7.43 per cent in the auction on this Tuesday from last Tuesday. The weighted average cut-off of 10-year state bonds also declined by 10 bps to 7.73 pe
The borrowing cost for the states fell for the fourth consecutive week as the weighted average cut-off eased 6 basis points (bps) to 7.46 per cent at the weekly auctions on Tuesday. Ten states have raised Rs 10,500 crore at the latest auction of state development loans, which is 1.5 per cent higher than indicated in the borrowing calendar, a first in a couple of years. Since the outbreak of Covid, states were borrowing much lower than indicated amount thanks to higher grants from the central government. last week the Centre released Rs 58,300 crore as tax devolution for July, up from Rs 47,600 crore each in the first quarter. Additionally, the Centre had approved Rs 31,500 crore of special assistance for capital expenditure to 10 states during that month. The weighted average cut-off has eased by 6 bps to 7.46 per cent from the past week, despite the weighted average tenor increasing to 14 years from 13, and the spread between 10-year state debt and the 10-year G-Secs (Government ..