Ministry of Finance

Posted On: 21 JUN 2019 6:52PM by PIB Delhi

Since Apr-June (Q1) 2010-11, Public Debt Management Cell (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, Ministry of Finance has been bringing out a quarterly report on debt management on a regular basis. The current report pertains to the quarter Jan - March 2019 (Q4 FY 2019).

During Q4 of FY19, the Central Government issued dated securities worth ₹ 1,56,000 crore as against ₹67,000 crore in Q4 of FY18. The weighted average maturity (WAM) of new issuances stood at 14.18 years in Q4 of FY19 (14.70 years in Q3 of FY 19). The weighted average yield (WAY) of issuances for the same quarter was 7.47 per cent compared to 7.82 per cent in Q3 of FY 19. The temporary cash flow mismatches were bridged through issuance of Cash Management Bills amounting to ₹60,000 crore during the quarter. The net average liquidity injection by RBI under Liquidity Adjustment Facility (LAF) including MSF was ₹52,364 crore during the quarter.

The total liabilities (including liabilities under the ‘Public Account’) of the Government, increased to ₹84,68,086 crore at end-March 2019 from ₹83,40,027 crore at end-December 2018. Public debt accounted for 89.5 per cent of total outstanding liabilities at end-March 2019. Nearly 28.27 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The holding pattern indicates a share of 40.5 per cent for commercial banks and 24.6 per cent for insurance companies by end-December 2018.

G-Sec yields have softened in Q4 of FY19 with the decrease in weighted average yield of primary issuances to 7.47 per cent from 7.82 per cent in Q3 of FY 19 reflecting the impact of several developments namely decline in WPI and CPI inflation, reduction in the policy repo rate under the LAF by 25 bps, OMO purchase auction (sell/ buy/ swap) and narrowing of trade deficit during Feb-March 2019. The yield on 10-year benchmark G-Sec (7.26% GS 2029) closed at 7.35 per cent on March 29, 2018. Central Government dated securities continued to account for a major share of total trading volumes in the secondary market, with a share of 83 per cent in total outright trading volumes in value terms during Q4 of FY19.

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Public debt issuance rose with longer maturities and lower yields, supported by cash management bills and RBI liquidity operations. Central Government debt management in Q4 FY2018-19 showed increased dated securities issuance with a weighted average maturity above a decade and softened weighted average yield; cash-flow mismatches were managed via Cash Management Bills and net liquidity injection under the Liquidity Adjustment Facility. Public debt formed the majority of outstanding liabilities, a notable share of dated securities had residual maturities under five years, holdings were concentrated in commercial banks and insurance companies, and secondary market yields softened amid monetary easing and open market operations.