Since April-June (Q1) 2010-11, Middle Office (MO) is bringing out a quarterly report on debt management. The current report pertains to the quarter April-June 2013 (Q1 FY14).

For fiscal year 2013-14 (FY14), gross and net market borrowings were budgeted moderately higher than previous year by 3.4 per cent and 3.6 per cent, respectively. Auctions during Q1 of FY14 were held in accordance with the pre-announced calendar. Government issued two new securities of 10 year and 6 year maturities and introduced Inflation Indexed Bonds. The weighted average maturity of dated securities issued during Q1 of FY14 at 15.1 years was higher than 13.5 years in the previous quarter while weighted average yield (cut-off) of issuance during the quarter declined to 7.63 per cent from 7.95 per cent in Q1 of FY13. The cash position of the Government during Q1 of FY14 was comfortable and remained in surplus mode for most part of the quarter.

The total public debt (excluding liabilities under the ‘Public Account’) of the Government at end-June 2013 increased on a quarter-on-quarter (QoQ) basis by 5.1 per cent (provisional) compared with an increase of 5.3 per cent in the previous quarter. Internal debt constituted 90.7 per cent of public debt and marketable dated securities accounted for 81.7 per cent of total public debt. About 34 per cent of outstanding dated securities have a residual maturity of up to 5 years compared with 31 per cent a quarter ago. Notwithstanding, a marginal increase over the quarter, the rollover risk in the debt portfolio continues to be low.

In the secondary market, bond yields eased during the quarter due to policy easing as well as OMO purchases by RBI, decline in inflation rate, slowdown in GDP growth rate and global factors. Bond yield curve steepened in the above 10-year maturity segment, while it flattened in the below 10 years maturity segment. Trading volumes increased further during the quarter. The annualised outright turnover ratio for Central Government dated securities (G-Secs) for Q1 of FY14 went up to 9.3 from 6.0 during the previous quarter.

The Quarterly Report on Debt Management for the quarter April-June 2013 (Q1 FY14) is also enclosed.

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Debt management: market borrowings and issuance changes led to longer maturities and eased yields in the quarter. Quarterly debt management report details the Government's market borrowings approach for April-June 2013: auctions adhered to the pre announced calendar, new 10 year and 6 year securities and Inflation Indexed Bonds were issued, weighted average maturity rose while weighted average yield fell, and the cash position remained broadly surplus. Public debt increased modestly quarter on quarter with internal and marketable dated securities dominating liabilities; more securities now have residual maturities up to five years though rollover risk remains low. Secondary market yields eased, the yield curve steepened above ten years, trading volumes rose and outright turnover increased.