Press Information Bureau

Government of India

Ministry of Finance

23-May-2016 19:12 IST

Since April-June (Q1) 2010-11, Middle Office (MO), Budget Division, Department of Economic Affairs, Ministry of Finance, is bringing-out a Quarterly Report on Debt Management on regular basis. The Current Report pertains to the Quarter January-March 2016 (Q 4 FY 16).

During Q4 of FY16, the Government issued dated securities worth ₹ 84,000 crore to complete its gross borrowings of ₹ 5,85,000 crore for FY 16. Gross and Net Market borrowing requirements of the Government for FY16 were revised lower to ₹ 5,85,000 crore and ₹ 4,40,608 crore, which were lower by 1.18 per cent and 2.75 per cent, respectively, than ₹ 5,92,000 crore and ₹ 4,53,205 crore in FY15. Auctions during Q4 of FY16 were held broadly in accordance with the pre-announced calendar. The weighted average maturity of primary issuance was kept long during this quarter and stood at 15.74 years, however, it was lower than Q3 FY 16 (16.72 years) due to market conditions.  The weighted average yield (cut-off) of issuance during Q4 of FY16, was at 7.89 per cent as against 7.70 per cent in Q3 of FY16, reflecting some hardening in yields during the quarter. The cash position of the Government during Q4 of FY16 was comfortable and remained in surplus mode during the quarter. The issuance amount under Treasury bills was also broadly as per calendar.

The Public Debt (excluding liabilities under the ‘Public Account’) of the Central Government provisionally decreased marginally. Internal debt constituted 92.0 per cent of public debt as at end-March 2016, while marketable securities accounted for 84.8 per cent of public debt.  About 26.9 per cent of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, around 5.4 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming quarters is expected to reduce roll over risk further.

G-sec yields witnessed significant intra-quarter movements. G-Sec market opened the quarter on weak note tracking the depreciating domestic currency and local equity market. The market sentiment was adversely affected in February due to higher than expected inflation numbers, hardening bias in US Treasuries, higher borrowings of states, uncertainties over issuance of UDAYA bonds, etc., and 10-year G-sec yield touched a high of 7.85%, general levels last seen in June 2015. Since February end, the market reversed its direction and gained significantly post budget on positive market sentiment. 10 Yr benchmark paper closed the quarter at 7.46%, lowest yield level since July 2013 as against 7.69% on December 31, 2015.   In Q4 FY 16, Central Government dated securities continued to account for a dominant portion of total trading volumes.

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DSM/KA

Public debt management: FY16 borrowings revised down; long dated issuances, T bill repayment and low rollover risk noted. Quarterly debt and cash management for Jan-Mar 2016 revised FY16 gross and net market borrowings to Rs. 5,85,000 crore and Rs. 4,40,608 crore; Rs. 84,000 crore of dated securities were issued in Q4 with auctions per the calendar, a long weighted average primary issuance maturity (15.74 years) and a cut off yield around 7.89-7.90%. Treasury bill issuance followed the calendar, net T bill repayment occurred amid a surplus cash position, outstanding public debt marginally decreased to Rs. 5,573,332 crore, weighted average maturity of outstanding dated stock was 10.50 years, and rollover risk was characterised as low.