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 October - December 2021 (Q3 FY22).

During Q3 of FY22, the Central Government issued dated securities worth ₹2,88,000 crore as against ₹2,83,975 crore in Q3 of FY21, while repayments were at ₹75,300 crore. The weighted average yield of primary issuances increased to 6.33 per cent in Q3 FY22 from 6.26 per cent in Q2 of FY22. The weighted average maturity of new issuances of dated securities was higher at 16.88 years in Q3 of FY22 as compared to 16.51 years in Q2 of FY22. During October - December 2021, the Central Government did not raise any amount through the Cash Management Bills. The Reserve Bank did not conduct Open Market operations for government securities during the quarter. The net daily average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility and Special Liquidity Facility was at ₹7,43,033 crore during the quarter.

Total liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, was ₹128,41,996 crore at end-December 2021 as against ₹125,71,747 crore at end-September 2021. This indicates a quarter-on-quarter increase of 2.15 per cent in Q3 FY22. Public debt accounted for 91.60 per cent of total outstanding liabilities at end-December 2021 as against 91.48 per cent at end-September 2021. Nearly 29.94 per cent of the outstanding dated securities had a residual maturity of less than 5 years.

The yields on Government securities hardened in the secondary market due to increase in supply of G-secs during the quarter like in first and second quarter of FY22. However, the yields were supported by decision of MPC to keep the Policy repo rate unchanged at 4 percent, to continue with accommodative stance during the Q3 FY22.

In secondary market, trading activities were concentrated in 7-10 year maturity bucket during the quarter mainly because of more trading observed in 10 year benchmark security. Private sector banks emerged as dominant trading segment in secondary market during the quarter. On a net basis, foreign banks and primary dealers were net sellers while co-operative banks, FIs, insurance companies, mutual funds, public sector banks, private sector banks and ‘Others’ were net buyers. The ownership pattern of Central Government securities indicates that share of commercial banks stood at 35.40 per cent at end-December 2021 as against 37.82 per cent at end-September 2021.

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Public debt management: increased dated securities issuance and longer maturity influenced yields and market ownership patterns. Public Debt Management reported that in October-December 2021 the Central Government issued dated securities with a higher weighted average yield and slightly longer weighted average maturity; no Cash Management Bills were raised and the Reserve Bank did not conduct open market operations. Liquidity remained absorbed under LAF. Secondary market trading concentrated in the 7-10 year bucket around the 10-year benchmark, with private sector banks dominant and mixed net buying/selling across institutional segments. Public debt formed the substantial majority of total government liabilities with a notable share of dated securities having residual maturity under five years.