The states continue to pay higher coupons to their debt investors, reflecting the overall hardening of the rates which jumped to 7.63 per cent at the latest weekly auctions held on Tuesday.
Accordingly, the spread between the cut-off of 10-year state bonds and Central bonds or G-secs yields widened to 48 basis points, the highest so far in the current fiscal which was 45 bps last week, Aditi Nayar, the chief economist at the rating agency Icra said.
According to Nayar, the states didn’t draw down much as there was additional tax devolution from the Centre in the month. The weighted average cut-off increased to 7.63 per cent from 7.61 per cent last week, with the increase in the weighted average tenor to 15 years from 13 years.