Quarterly Report on Public Debt Management for Quarter Ended December 2022

Since Apr-June (Q1) 2010-11, Public Debt Management Cell (PDMC), 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 (Q3 FY23).

During Q3 of FY23, the Central Government raised an amount worth Rs 3,51,000 crore through dated securities, as against notified amount of Rs 3,18,000 crore in the borrowing calendar (Last auction amounting to Rs  33,000 crore of Q2 FY 23 was settled in Q3 FY 23). During the quarter an amount of Rs 85, 377.9 crore due for redemption was repaid on maturity date. Weighted average yield of primary issuances hardened to 7.38 per cent in Q3 FY23 from 7.33 per cent in Q2 of FY23. The weighted average maturity of new issuances of dated securities elongated to 16.56 years in Q3 of FY23 as compared to 15.62 years in Q2 of FY23. During October- December 2022, 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 Rs 39,604 crore during the quarter.

Total gross liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased marginally to Rs 1,50,95,970.8 crore at end-December 2022 from Rs 1,47,19,572.2 crore at end- September 2022. This represented a quarter-on-quarter increase of 2.6 per cent in Q3 FY2022-23. Public debt accounted for 89.0 per cent of total gross liabilities at end-December 2022 in contrast to 89.1 per cent at end- September 2022.Nearly 28.29 per cent of the outstanding dated securities had a residual maturity of less than 5 years.

The yield on the 10-year benchmark security softened from 7.40% at the close of the quarter on 30th September, 2022 to 7.33% at the close on 30th December, 2022, thus softening by 7 bps during the Quarter. MPC decided to hike the policy repo rate by by 35 bps, i.e., from 5.90% to 6.25% on 7th December, 2022 largely with an intention to contain inflation.

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 quarter under review with a share of 24.41 per cent in “Buy” deals and 24.08 per cent in “Sell” deals in the total outright trading activity, followed by foreign banks, primary dealers, public sector banks and mutual fund. On a net basis, foreign banks, public sector banks and primary dealers were net sellers while co-operative banks, FIs, insurance companies, mutual funds, private sector banks and ‘Others’ were net buyers in the secondary market. The ownership pattern of Central Government securities indicates that share of commercial banks stood moderated to 38.0 per cent at end- December 2022, relative to 38.3 per cent at end-September 2022.

Access the full report: Quarterly Report on Public Debt Management for October-December (Q3 FY23).