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2025-12-16 16:58:32
[Diverging Interest Rates in Indian State Bond Issuance Reveal Market Pricing of Credit Risk] ⑴ The Reserve Bank of India released the auction results for several state government bonds, revealing yield levels across different maturities and regions. ⑵ The yield to maturity of 2033 bonds reissued in Maharashtra was 7.2706%. ⑶ The yield to maturity of 2037 bonds reissued in Maharashtra was 7.4189%. ⑷ The yields to 12-year and 14-year loans in Uttar Pradesh were 7.46% and 7.51%, respectively. ⑸ The yield to maturity of 2033 bonds reissued in Uttar Pradesh was 7.2597%. ⑹ The yields to 16-year and 19-year loans in West Bengal were 7.61% and 7.52%, respectively. ⑷ Tamil Nadu did not accept any bids in its 11-year securities auction, indicating a divergence in pricing for this maturity within the state or the market. (5) Differences in borrowing costs between states reflect market assessments of the fiscal conditions and credit risks of different regions. (6) Investors are becoming more selective in the local government bond market, and the continued impact of the fiscal health of each state on financing costs needs to be monitored in the future.
