Mumbai: India said on Friday a spate of re-issuances of government bonds this year was aimed at building adequate volume, and the relative longer maturities were a conscious strategy to ease the pressure on repayments.
The government had issued only two new securities in the June quarter, constituting 6% of total issuance in the first quarter of the fiscal year 2010/11.
New Delhi is scheduled to borrow a record Rs4.57 trillion ($97.9 billion) this year, out of which 2.87 trillion is to be raised in April-September.
“A larger share of re-issues reflect the continued focus on building up adequate volumes under existing securities (and) imparting greater liquidity in the secondary market,” the government said in a quarterly report on public debt management.
The focus was also to lengthen the average maturity and help spread out the repayments. “The relatively high average maturity of government bonds is the result of conscious debt strategy, demand pattern, and market development initiatives.”
“It has also been a conscious policy to maintain issuance up to 30 years to develop a long-term and liquid yield curve,” the finance ministry said. However, the weighted average maturity of issuances in the June quarter was reduced to ensure success of the borrowing programme given the high issuance plan, it said.
The weighted average maturity fell to 10.45 years in the June quarter from 11.86 years in the same period a year earlier.
At the end of June, 28% of outstanding stock issued had a maturity of up to 5 years and 34% of more than 10 years.
Banks were the main buyers holding 51% of government bonds, followed by insurance and provident funds with 29%. Foreign investors held 0.6 percent, while the Reserve Bank of India had 12% for its monetary operations.
Sales of treasury bills, or short-term securities, fell short of repayments in April-June, although the government had said in its budget estimates they would be even.
Treasury bills issued in June quarter were Rs85,182 crore, compared with repayments of Rs87,503 crore, the ministry said.
The central bank had cut the treasury bill amounts in June and July following an outflow of nearly Rs1.2 trillion towards telecom spectrum auction and advance tax payments that caused a severe cash crunch.