G-Sec maturity increased to 12.6 years

Our Banking Bureau

Mumbai, Aug 28: THE weighted average maturity of debt issued during the year through dated securities increased to 12.6 years in 1999-2000 from the 7.7 years and 6.6 years of the preceding two fiscals. However, uncertainties in the financial markets during the first half of the current fiscal as also the need to meet investor preference for lower market risk necessitated issuance of shorter-term securities, as a consequence of which the weighted average maturity of new issuances dipped to 10.6 years.

The range of maturities of loans issued was 2.89 years to 20 years during 2000-2001 as against 5.26 years to 19.61 years during 1999-2000. Despite the elongation of maturities, interest rates on government dated-stocks have softened in recent years.

Under the market borrowing programme, comprising dated securities and 364-day Treasury-bills, the Central government mobilised Rs 73,787 crore under its net borrowing programme and Rs 1,15,183 crore under its gross borrowing programme.

The actual borrowing remained within the budgeted limit in contrast to the increase in gross and net terms of about 19 per cent and 27 per cent, respectively, in 1999-2000; and of about 18.0 per cent, and 30.0 per cent, respectively, in 1998-99 over the budgeted level.
Dated-securities aggregating Rs 1,00,183 crore were issued during 2000-01 as against the Rs 86,630 crore in 1999-2000. About two-thirds of the issuance took place during the first half of the year when there was seasonal slackening in credit demand from the non-government sector.

Given that the limited absorptive capacity of the market acts as a constraint on the amount that could be issued at any point of time, the government had to enter the market on a number of occasions keeping in view the liquidity conditions and the government’s cash flows/ways and means advances (WMA) position. A total of 31 loans, comprising 18 reissues and 13 fresh loans, were floated on 26 occasions, including private placement of five loans with the Reserve Bank in 2000-01. This compares to the 30 loans on 21 occasions (with private placement of eight loans) in the preceding fiscal.

Gross and net amounts raised through issue of Government of India dated securities during 2001-02 (up to August 10, 2001) were Rs 70,000 crore and Rs 56,025 crore, respectively. This included private placements of five loans for Rs.21,000 crore with the RBI.