Indian state firms' short — term borrowing costs spike to more than 8%

By Dharamraj Dhutia MUMBAI, Oct 14 (Reuters) — The Small Industries Development Bank of India raised short-term funds at a coupon of more than 8% for the first time in nearly a decade as borrowing costs have surged in Asia's third-largest economy. Here are a few details: The high-rated state-run undertaking raised 51.76 billion rupees ($544 million) on Wednesday through three-year and near two-month bonds at a coupon of 8.05% Bankers said other state-run firms may follow suit after SIDBI has "belled the cat" with the 8%-plus issuance "Market has priced in a lot of pessimism, and we have not seen such rates even during rate hike cycles," said Avnish Jain, fixed income CIO at Canara Robeco Mutual Fund Last week, the RBI raised repo rate, and recent commentary has hinted at more hikes in the coming months The rise in corporate bond yields reflects evolving funding dynamics, changing investor demand and expectations of a tighter interest-rate environment, said Harish Reddy, co-founder, Stable Money, a fixed income investment platform "Factors such as inflationary pressures, global bond yields and liquidity conditions are contributing to the repricing of borrowing costs across the marke