Mumbai: State starving countries continue to pay higher for their market loans, forced to offer results close to 7 percent even when the system is flooded with liquidity in the middle of benign interest rates, according to the report.
The six countries who went to the market to auction of state government securities on Monday to raise Rs 8,700 Crore had to offer 6.96 percent at a weighted average rate, the 3 pseitered base (BPS) lower than the previous weekly auction.
Higher costs force Haryana to reject all bids for auction RS 1,000 Crore, while other countries receive a notified amount.
The weighted average loan costs in all states and tenures are 6.96 percent, only 3 bps lower than the auction held last week.
This decline can be attributed to the easing of global crude oil prices after the main oil producer approves weekends to increase oil output, the word treatment rating.
Market loan costs for countries have ruled more than 6.9 percent since the third week of June.
This has increased by 21 bps since mid-June and 40 bps since April 8, the report said.
The spread between 10-year state bonds and the new secondary market results 10 years G-S-SEC stabilized at 88 bps, just like last week.
Spreads have increased from around 50 bps in early April.
The cost remains high even though the loan by the state has so far been 13 percent lower on an annual basis.
Twenty-three states and Delhi have collected total Rs 1,86,850 crores so far this fiscal, such as against Rs 2,13,776 Crore borrowed Y-O-Y.
According to the tentative loan calendar, 26 states and Delhi must sell debts worth 2,22,550 crore now, but they only collect 87 percent of this and it also by 23 states and Delhi.
The lower market quantum loan is a refillective state expenditure lower after the second wave of Covid-19, which leads to both income income and income collection.
Compared to last year, 14 states have borrowed less or not borrowed at all.
While Kerala, who has paid 8.96 percent last April for five years, has borrowed 33 percent less this year, for Tamil Nadu 21 percent.
Instead, Karnataka has not raised funds from the market at all.
It is famous as last year the country has collected Rs 12,000 Crore during the year to date (YTD).
But the YTD loan was higher for Uttar Pradesh (67 percent), West Bengal (17 percent), Telangana (14 percent) and Rajasthan (6 percent).
Tamil Nadu, Maharashtra, Rajasthan, Andhra Pradesh and Telangana have become the top five loan countries so far this year, accounts for around 60 percent of total loans.