Lower-than-indicated supply of state government securities on Tuesday led to an 8 basis point fall in the borrowing cost, reducing it to a five-week low of weighted average cut-off at 7.36 per cent.

       As many as nine states raised Rs 12,400 crore, which was 26 per cent lower than the amount indicated in the auction calendar, from the market at an average rate of 7.36 per cent, down from 7.43 per cent in the last weekly auction.

       With the weighted average cut-off falling by 8 bps to 7.36 per cent, the spread between the cut-off of 10-year state debt and the G-sec yield declined to 29 bps from 33 bps last week, Icra Ratings said in a note.

       The fall in cut-off is also due to the dip in the tenor to 13 years from 14 years, tightening the clustered yields and inversion in parts of the yield curve.

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