Since Apr-Jun (Q1) 2010-11, Middle Office (MO) is bringing out a quarterly report on debt management. The current report pertains to the quarter Jan-Mar 2014 (Q4 FY14).

For fiscal year 2013-14 (FY14), gross and net market borrowings were higher than previous year by 1.0 per cent and 0.2 per cent, respectively. Auctions during Q4 of FY14 were held in accordance with the pre-announced calendar apart from the cancellation of one deferred auction of Rs. 15,000 crore scheduled on January 17, 2013. The weighted average maturity and weighted average yield (cut-off) of dated securities issued during Q4 of FY14 remained stable at 13.77 years (13.91 years in the previous quarter) and 9.07 per cent (8.93 per cent in Q3) respectively. Weighted average yield of issuance during FY14 at 8.41 per cent was marginally higher than 8.36 per cent in the previous fiscal year, while weighted average maturity at 14.23 years was higher than 13.5 years in FY13. The cash position of the Government during Q4 was comfortable and remained in surplus mode during the quarter. As budgeted in Union Budget 2013-14, the Government repurchased its Securities through reverse auction for an aggregate amount of Rs. 15,590 crore (face value) during March 2014 to prematurely redeem the Government Stocks by utilizing its surplus cash balances. In addition switching of government securities worth Rs. 31,400 crore from 2014-15 and 2015-16 maturity buckets to longer tenors was also conducted in fourth quarter.

The total public debt (excluding liabilities under the ‘Public Account’) of the Government at end-March 2014 decreased marginally on a quarter-on-quarter (QoQ) basis by 0.1 per cent (provisional) compared with an increase of 3.1 per cent in the previous quarter. Internal debt constituted 91.1 per cent of public debt and marketable securities accounted for 83.3 per cent of total public debt. About 29.8 per cent of outstanding dated securities have a residual maturity of up to 5 years compared with about 30.2 per cent a quarter ago which implies that over the next five years, on an average, less than 6.0 per cent of outstanding stock needs to be rolled over every year.

In the secondary market, while there was no change in closing levels of 10 year bench mark Government of India security at end-quarter from previous quarter end (8.84 % on March 31, 2014), the yield traded in a range of 8.52% - 8.94% during Q4 of FY 14. Compared to previous quarter, bonds yields marginally moderated over the curve with marginally flattening at the longer end while some steepening in maturities below 10 years. The total volume of Government securities transacted on an outright basis increased by of 18.32 per cent over the preceding quarter, contributed mainly by Central government dated securities. The annualised outright turnover ratio for Central government dated securities for Q4 of FY14 increased to 3.65 from 3.10 during the previous quarter.

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Public debt management: market borrowings slightly higher and issuance, maturity, and liquidity broadly stable. Public debt management for Q4 FY14 shows slightly higher gross and net market borrowings year-on-year with stable issuance metrics. Auctions largely followed the announced calendar except one cancellation. Weighted average maturity and yield of Q4 issuance remained stable; fiscal-year averages were marginally higher. The government repurchased securities using surplus cash and executed switches to longer tenors, lessening near-term rollover. Total public debt edged down quarter-on-quarter, dominated by internal debt and marketable securities. A notable portion of dated securities has residual maturity up to five years, limiting average annual rollover needs. Secondary-market yields traded within a narrow range and outright turnover rose, supporting liquidity.