Average cut-off yield spikes by 12 bps to 7.84% at state bond action

Dealers said Bengal and UP raised amounts via bonds with 15-17 year maturity and cut-off yield above 7.9%; pricing likely to remain under pressure in near term

At the state government bond auction on Tuesday, the weighted average cut-off yields shot up by 12 basis points (bps) to 7.84 per cent as some states raised large amounts through long-tenor instruments.

The weighted average cut-off for the previous auction, held on October 11, was 7.72 per cent.

Bond dealers said West Bengal and Uttar Pradesh raised funds through bonds with 15-17-year maturities with cut-off yields above 7.9 per cent.

Fourteen state governments raised Rs 25,200 crore on Tuesday, which was 3 per cent more than the Rs 24,500 crore indicated for this week in the third quarter auction