State borrowings
States borrowing has been scheduled at Rs 2115.52 billion during Q2FY23. During Q1FY23, Rs 1102.40 billion has been borrowed by states. During Apr-June 22, 10-year SDL auction cut-off yield rose by 54 bps to 7.86% while benchmark 10-year yield moved upby 58 bps to 7.42% during the same period. Factors such as policy rate hike, global rate hikes, and higher inflation have caused yields to spike.
Going ahead, as higher borrowing has been notified for states during Q2FY23 as compared to Q1FY23, SDL yields are likely to move up further from current level in tandem with g-sec yields.
Fiscal Deficit-India's federal fiscal deficit between April and May touched Rs 2.04 lakh crore ($25.84 billion), or 12.3% of the budgeted target.
External Debt-India’s external debt came in at US$ 620.7 billion as of 31st March 2022 as compared to US$ 570 billion as of 31st March 2021. The external debt to GDP ratio declined to 19.9% at end-March 2022 from 21.2% at end-March 2021.
GST collection-India’s GST collection stood at Rs 1.44 trillion in June 2022.
Government bonds, SDL and OIS yield movements
Last week, 10-year benchmark 6.54% 2032 paper yield came down by 2 bps to 7.42%. The 5-year benchmark bond, 6.79% 2027 yield declined by 3 bps to 7.21%. 6.64% 2035 yield remained steady at 7.55%. Long-term paper, 6.99% 2051 yield remained unchanged at 7.70%.
The spread of 10-year bond over 5-year bond rose to 21 bps from 20 bps in the previous week. The 15-year benchmark over 10-year benchmark spread increased to 13 bps from 10 bps while the 30-year benchmark over 10-year benchmark spread rose to 28 bps from 26 bps on a weekly basis.
10-year SDL auction cut-off declined to 7.86% from 7.88% in the previous week while spread remained unchanged at 40 bps.
On a weekly basis, 1-year OIS yield declined by 4 bps to 6.31% while the 5-year OIS yield came down by 15 bps to 6.79%.
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