States' Bond Prices Down By 7 Basis Points To 7.61%

Even though the states have borrowed heavily from the market, bond issuances at the weekly auction on Tuesday rose sharply by 42% and the average prices came down by 7 basis points to a three-week low of 7.61%.

Twelve states have raised Rs 20,300 crore through state government securities on Tuesday, which is a sharp 42% increase on-year, though the amount raised is 23% lower than what was indicated for the week in the auction calendar.

Accordingly, the weighted average cut-off eased considerably by 7 basis points to 7.61%, which is a three-week low, despite the weighted average tenor remaining stable at 15 years, according to a note by ICRA Ltd.

The spread between the 10-year state bonds and the new G-sec stood at 38 basis points on Tuesday, while the same between the 10-year state bonds and old G-sec rose a notch to 34 basis points from 33 basis points last week. This had the yield curve remaining inverted at the longer end, the agency said.