The borrowing cost of State Development Loans (SDL), with a maturity of 10-years, rose sharply by 10 basis points to a 21-month high in Tuesday’s auction due to a steep rise in yields on government securities in the last few days. The borrowing cost has touched its highest level after April 13, 2020. According to the Reserve Bank of India (RBI), the 10-year weighted average borrowing cost for states was at 7.24% on January 18, higher than 7.14% on January 11. With this, the spread between 10-year government securities and SDLs has widened to more than 61 basis points as against the spread of 58 basis points a week ago. “The rise is in line with the rise in the yields on government securities and thus it has not been surprising,” said Sandeep Yadav, senior vice president, head –fixed income, DSP Investment Managers.