Gross and Net Market Borrowings Budgeted Moderately Higher than Previous Year by 3.8 Per Cent And 3.6 Per Cent Respectively During Current Fiscal (Fy: 2013-14); Total Public DEBT (Excluding Liabilities Under the ‘Public Account’) of the Government at End-September 2013 Increased on A Quarter-on-Quarter Basis by 6.7 Per Cent (Provisional) Compared With an Increase of 4.4 Per Cent in the Previous Quarter

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 July-September 2013 (Q2 : FY14).

For Fiscal Year 2013-14 (FY14), Gross and Net Market Borrowings were budgeted moderately higher than previous year by 3.8 per cent and 3.6 per cent respectively. Auctions during Q2 of FY14 were held largely in accordance with the pre-announced calendar. Government issued one new security of 17 year maturity during the quarter. The weighted average maturity of dated securities issued during Q2 of FY14 at 14.1 years was lower than 15.1 years in the previous quarter while weighted average yield (cut-off) of issuance during the quarter increased to 8.56 per cent from 7.63 per cent in Q1 of FY13. The cash position of the Government during Q2 of FY14 went into deficit in the beginning of the quarter.

The total public debt (excluding liabilities under the ‘Public Account’) of the Government at end-September 2013 increased on a quarter-on-quarter (QoQ) basis by 6.7 per cent (provisional) compared with an increase of 4.4 per cent in the previous quarter. Internal debt constituted 90.8 per cent of public debt and marketable securities accounted for 83.0 per cent of total public debt. About 31 per cent of outstanding dated securities have a residual maturity of up to 5 years compared with about 34 per cent a quarter ago, reflecting a decline in the rollover risk in the debt portfolio.  

In the secondary market, bond yields went-up during the quarter mainly due to capital outflows from debt market triggered by uncertainty regarding QE3 programme of the US Federal Reserve and subsequent monetary tightening by RBI to support the Rupee as well as rise in inflation rate. Bond yield curve steepened in the above 10-year maturity segment, while it remained flat in the below 10 years maturity segment. Trading volumes declined during the quarter amidst rising yields and uncertainty regarding economic outlook. The annualised outright turn-over ratio for Central Government dated securities for Q2 of FY14 dropped to 3.5 from 9.3 during the previous quarter.  

The aforesaid report on Public Debt Management for the second quarter of 2013-14 (July-September 2013) would also be available on the website of Ministry of Finance i.e., [email protected].  

Public debt management report flags higher market borrowings, rising yields, shorter maturities and reduced market liquidity. Quarterly review for July-September 2013 records moderately higher budgeted market borrowings for FY2013-14, issuance of a new 17 year security, lower weighted average maturity and higher weighted average yield on issued dated securities, and an early quarter government cash deficit. Total public debt excluding Public Account liabilities increased QoQ, dominated by internal debt and marketable securities; the residual maturity profile shortened, reducing rollover risk. Secondary market yields rose, the yield curve steepened above ten years, trading volumes fell and the outright turnover ratio for central government dated securities declined substantially.