New 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 Jul-Sept 2018 (Q2 FY 2019).
During Q2 of FY19, the Central Government issued dated securities worth `₹ 1,44,000 crore as against ₹1,89,000 crore in Q2 of FY18. The weighted average maturity (WAM) of new issuances stood at 15.04 years in Q2 of FY 19 (14.58 years in Q2 of FY 18). The weighted average yield (WAY) of issuances for the same quarter was 8.01 per cent compared to 6.76 per cent in Q2 of FY 18.
The temporary cash flow mismatches were bridged through the issuance of Cash Management Bills amounting to ₹20,000 crore during the quarter. The net average liquidity injection by RBI under Liquidity Adjustment Facility (LAF) including MSF was ₹16,097.2 crore during the quarter.
The total liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased to ₹82,03,252 crore at end-September 2018 from ₹79,80,667 crore at end-June 2018. Public debt accounted for 89.3 per cent of total outstanding liabilities at end-September 2018 with the share of internal debt being 82.9 per cent.
Nearly 26.6 per cent of the outstanding dated securities had a residual maturity of fewer than 5 years. The holding pattern indicates a share of 41.4 per cent for commercial banks and 24.6 per cent for insurance companies by end-September 2018.
G-Sec yields have shown a hardening trend in Q2 of FY19 with the increase in weighted average yield of primary issuances to 8.01 per cent from 7.76 per cent since the last quarter reflecting the impact of several developments namely an increase in crude oil prices, depreciation in the value of Rupee against the US dollar and rate hikes by US Fed and the Reserve Bank. The yield on 10-year benchmark G-Sec (7.17% GS 2028) reached a high of 8.18 per cent on September 11, 2018.
A similar reflection is also observed in yield spreads of different maturities as at end-September 2018 (except for G-Secs with 11-year maturity) compared to those prevailing at end-June 2018. Central Government dated securities continued to account for a major share of total trading volumes in the secondary market, with a share of 85 per cent in total outright trading volumes in value terms during Q2 of FY 19.