States continue to pay higher interest rates to investors for their debt, with the latest weighted average cost rising to 7.46% at Tuesday's auctions wherein nine states raised ₹16,200 crore.
The weighted average cut-off/yield on state government securities (SGS) rose by 5 bps to 7.46% in the auction held on Tuesday, from 7.41% in the last weekly auction, despite a stable weighted average tenor of 16 years and the money raised was in line with the amount indicated for this week in the auction calendar, according to a note by Aditi Nayar, the chief economist at Icra Ratings.
Accordingly, the spread between the 10-year SGS and 10-year government of India security yield eased mildly to 32 bps from 34 bps last week.
