Yield determinants of state development loans4 min read 22 Nov 2017, 11:18 PM IST
States which are frequently borrowing from the market with higher ticket size are attracting better yields
It is a common parlance that yield on state development loans (SDLs) trade at a premium to G-sec yields. This difference in yield attracts a lot of debate across research analysts and market participants and the common refrain is that such a yield differential could possibly be attributed to the fiscal marksmanship of individual states. We however believe otherwise and our results show such spread is a by-product of typical market idiosyncrasies/microstructure.
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