Public Debt Management Cell (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, Ministry of Finance has today brought-out the Quarterly Report on Debt Management for the Quarter April-June 2018 (Q1 FY 2019).

During Q1 of FY19, the Central Government issued dated securities worth ₹ 1,44,000 crore in 12 tranches as against ₹ 1,68,000 crore in Q1 of FY18. The Weighted Average Maturity (WAM) of new issuances increased to 15.16 years from 14.92 years in Q1 of FY 18 owing to issuances of longer tenor securities. The weighted average yield (WAY) of issuances for the same quarter was 7.76 per cent compared to 7.01 per cent in Q1 of FY 18. The temporary cash flow mismatches were bridged through issuances of Cash Management Bills in three tranches up to Rs. 65,000 crore during the Quarter. The net average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including MSF was ₹ 25,825 crore during the Quarter.

Total liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased to Rs. 79,80,667 crore at end-June 2018 from Rs. 77,98,772 crore at end-March 2018. Public debt accounted for 89.3 per cent of total outstanding liabilities at end-June 2018 with internal debt accounting for 83.0 per cent of its share. Nearly 24.9 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The holding pattern indicates a share of 42.7 per cent for commercial banks and 23.5 per cent for insurance companies by end-March 2018.

G-Sec yields have shown a hardening trend in Q1 of FY19 with the increase in weighted average yield of primary issuances to 7.76 per cent from 7.34 per cent since the last quarter reflecting the impact of both global and domestic developments. The manifestation of global developments being increase in crude oil prices, rate hike by the US Federal Reserve, rising geo-political tensions while domestic developments included weak Rupee, rise in CPI, demand-supply imbalance for shorter-tenor securities and weak demand from FPIs. The yield on 10-year benchmark G-Sec (7.17% GS 2028) closed higher at 7.90 per cent on June 29, 2018. A similar reflection is also observed in yield spreads of different maturities as at end-June 2018 compared to those prevailing at end-March 2018. Central Government dated securities continued to account for a major share of total trading volumes, with a share of 86 per cent in total outright trading and repo volumes in value terms during Q1 of FY 19.

Click here  Quarterly Report

Public debt management shifts to longer maturities and higher yields, using cash management bills and liquidity absorption measures. Public debt management in Q1 FY2018-19 featured issuance of dated securities with longer weighted average maturity and higher weighted average yield, use of Cash Management Bills to bridge temporary cash mismatches, and net liquidity absorption by the central bank under LAF. Total government liabilities rose provisionally at end-June with public debt forming the bulk and internal debt the principal component; a notable portion of dated securities had residual maturities below five years. Market yields hardened and yield spreads widened due to global and domestic factors, while central government securities dominated trading volumes.