The weighted average cost of borrowing across states fell 27 bps to 6.72 per cent from the previous week, but the weighted average yield of the most-traded 10 year debt was unchanged at 6.97 per cent.
The 10 year lease yields are ruling at the highest level since mid-August and have been tracking the rise in G-Sec yields since late September which have risen on concerns over the rise in global energy prices and the uptick in US treasury yields, Care Rating Chief economist Madan Sabnavis has said in a note.
The average loan pricing is reduced this time around to 6.72 per cent because the average tenor was down to 9 years at today's auctions, Icra Rating said in a review note.
Similarly, the spread between the 10 year loans auctioned on Tuesday, when three states raised just Rs 5,000 crore, which is down 15 per cent from the year-ago level, and the primary market yield of the 10 year G-Sec was 64 bps, 4 bps lower than the end of the month, the Care Rating report said.
This fiscal borrowing was 15 per cent less than in the previous period of FY 21, since only 27 states and two UTs had raised Rs 3.48 lakh crore against Rs 4.10 lakh crore borrowed by 28 states and two UTs in the same period last fiscal.
The borrowings are also 11 per cent lower than indicated in the auction calendar for this period.
The states are taking less and less long term debt as many of them have higher revenue position relative to the expenditure undertaken by them on one hand and on the other, many are tapping into the financial accommodation being provided by RBI by way of special drawing facility and higher ways and means advances.