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At the auction held on Tuesday, 11 states raised Rs 11,600 crore by selling state government securities (SGS), which trailed by over 22 per cent from the amount indicated for this week in the Q3 auction calendar at Rs 15,000 crore.
The prices shot up reflecting the overall higher risk averseness of investors with the rising interest rates.
Eight states raised Rs 9,600 crore through state government securities (SGS) on Tuesday, which is 13.6 per cent higher than the amount indicated for this week in the auction calendar, according to Aditi Nayar, the chief economist at Icra Ratings.
The borrowing cost for Indian states has increased by 10 basis points to 7.56% at the first weekly debt auction of the third quarter. This is the highest rate in the past 23 weeks. Despite a decline in the average tenor to 13 years, the weighted average cost has risen. Additionally, the spread between the cut-off of 10-year state bonds and the new 10-year G-Secs yield has also increased slightly.
In the last weekly auction of the June quarter, 12 states raised Rs 22,500 crore in debt on Tuesday.