Just SLR status won’t sell state papers
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Despite the interest among the banks and insurance companies to chase these papers the divergence in spread is now beginning to stand out. These are somewhat like the Euro bonds.
The parentage is deciding the pricing of the paper though all are sovereign and are traded in the same currency. Just compare the pricing difference between a German Euro bond and a Greek one, to figure out how it goes. As more Indian states enter the bond markets, how efficiently they manage their state finances will determine the cost of raising funds instead of crutches like an SLR tag.
Subhomoy is a Deputy Editor based in New Delhi.