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Informist, Wednesday, Jul. 2, 2025

NEW DELHI – The government's weighted average yield for its dated security issuances in 2024-25 (Apr-Mar) fell 28 basis point on year to 6.96%, the lowest since FY22. The borrowing costs fell even as the weighted average maturity of the issuance rose to hit a record, according to data published in the finance ministry's Public Debt Management Quarterly Report for Jan-Mar Wednesday.

 

The weighted average maturity of gilts raised in FY25 was 20.65 years, up from 18.09 years in the previous fiscal, and the highest since at least FY11, according to the data. In FY11, securities maturing in "20 years and above" made up around 15% of the calendar. In contrast, the government completed 38.2% of its gross borrowing programme in FY25 through 30-50 year bonds alone.

 

The weighted average yield maturity on outstanding stock as of Mar. 31 was 13.24 years, up from 10.23 years at the end of FY15 and 12.54 years at the end of FY24. Even as the maturity rose, the weighted average coupon fell to 7.25% at the end of FY25 from 7.29% the previous year. Government bond yields fell sharply during FY25 due to a combination of factors, in a unilateral move downwards. Quarterly data showed the weighted average yield on dated securities was 7.14% in Apr-Jun, falling to 6.87% by Jan-Mar.

 

The Centre was able to consolidate its finances more than expected, allowing bond buybacks, and the Reserve Bank of India bought INR 2.83 trillion of gilts through auctions and in the secondary market in Jan-Mar. In addition, the RBI's Monetary Policy Committee cut rates for the first time in nearly five years in February in the face of falling inflation. India's inclusion in global bond indices starting June 2024 also prompted foreign portfolio investors to buy gilts worth over $15 billion in FY25.

 

At the end of March, the maturity profile of outstanding debt showed bonds maturing in 5-10 years made up a third of the total outstanding of INR 112 trillion. Bonds maturing in 1-5 years and above 20 years made up around a quarter of the outanding debt, while loans maturing in 10-20 years made up 16.0%. Only 3.5% of the outstanding loans were maturing within a year, the report said.

 

"Debt maturing (Dated Securities) in the next five years worked out to 26.5% of total outstanding debt at end-March 2025 compared to 26.0% at end December 2024, i.e., 5.3 per cent of outstanding stock, on an average, needs to be repaid every year over the next five years. Thus, the roll-over risk in dated securities portfolio remains low," the report said.

 

The Centre's total gross liabilities as per the Fiscal Responsibility and Budget Management Act as of March-end rose to INR 185.94 trillion, up 3.3% on quarter. Public debt made up nearly 89% of the liabilities and external debt totalled only INR 8.74 trillion at the current rate of exchange, the report said.  End

 

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

 

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