Rising yields impact states' borrowing costs

MUMBAI: Six states raised a total of Rs 20,100 crore in the latest state development loan auction conducted by RBI on Tuesday, with weighted average yields ranging between 7.6% and 7.9% across tenures of 6 to 30 years. The results are in line with the rise in yields on central govt bonds where 10-year bond yields have risen to 7.1%.

The auction saw bonds with remaining maturities spanning from 6 years, maturing in 2032, to 30 years, maturing in 2056, reflecting a wide spread of borrowing durations by states.

Maharashtra emerged as the largest borrower, raising Rs 4,000 crore across three tenures, although Rajasthan also matched the same aggregate borrowing amount across multiple tenures. Maharashtra raised Rs 800 crore at a weighted average yield of 7.8% for an eight-year bond maturing in 2034, Rs 1,600 crore at 7.9% for an 18-year bond maturing in 2044, and Rs 1,600 crore at 7.9% for a 28-year bond maturing in 2054.


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