The Treasury
Commonwealth Debt Management 1998-99
© Commonwealth of Australia 1999
ISBN 0 642 74017 8
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Contents
Introduction
1998-99 Debt Issue and Debt Repurchase Program
Overview
Long-term Debt Issuance in 1998-99 - The Year in Review
Treasury Fixed Coupon Bonds
Treasury Indexed Bonds
Treasury Adjustable Rate Bonds
Commonwealth Cash Management and Treasury Note Issuance Program in 1998-99
The Cash Management Task
Cash Management Outcomes
Treasury Note Issuance Program
Treasury Note Tender Results
Portfolio Management
Overview
Portfolio Management in 1998-99
Market Value of the Commonwealth Portfolio at 30 June 1999
Swap Transactions
Appendices
Appendix 1: Public Debt Interest in 1998-99
Appendix 2: Liaison with Credit Rating Agencies
Appendix 3: The Secondary Market for CGS – Movements in Yields
Appendix 4: Commonwealth Government Securities Issued During 1998-99
Appendix 5: The Stock of Commonwealth Government Securities on Issue
Appendix 6: Redemption in 1998-99 of Commonwealth Government Securities on Issue for the Commonwealth
Appendix 7: Commonwealth Government Securities on Issue for the States and the Territories
Appendix 8: The Loan Consolidation and Investment Reserve (LCIR)
Appendix 9: Glossary
Tables and Charts
Table 1: Net Funding Requirement Reconciliation
Table 2: Commonwealth Term Deposits, 1998-99
Table 3: Broad Characteristics of the Commonwealth Portfolio (After Swaps)
Table 4: Swap Portfolio by Counterparty Credit Rating
Chart 1: Issuance by Borrowing Instrument, 1998-99
Chart 2: Commonwealth Long-term Domestic Debt Instruments - Issue and Redemption in 1998-99
Chart 3: The Maturity Profile of Commonwealth Long-term Domestic Debt Instruments at 30 June 1999
Chart 4: Net CGS on Issue for the Commonwealth as a Per Cent of GDP
Chart 5: Treasury Fixed Coupon Bond Tenders, 1998-99
Chart 6: Treasury Fixed Coupon Bonds - 'At Tender' Margin to Secondary Market Yields
Chart 7: Treasury Indexed Bonds - 'At Tender' Margin to Secondary Market Yields
Chart 8: Weekly Treasury Note Issuance, 1998-99
Chart 9: Holdings of Treasury Notes, 1998-99
Chart 10: Treasury Notes Outstanding, 1998-99
Chart 11: Treasury Notes - 'At Tender' Margin to Equivalent Maturity Bank Bill Yields
Chart 12: Australian Interest Rate Exposure, 1998-99
Chart 13: US Dollar Exposure, 1998-99
Chart 14: US Interest Rate Exposure, 1998-99
Introduction
The Treasurer has ministerial responsibility for the Commonwealth's debt management operations and, in accordance with the relevant legislation, authorises officers of the Treasury to undertake certain of these responsibilities on his behalf.
The Treasury is responsible for advising the Treasurer on all aspects of Commonwealth debt management. Debt management operations cover the issue of various borrowing instruments, the strategic formulation and undertaking of portfolio management, including through swap transactions, the administration of the redemption of debt represented by Commonwealth Government securities (CGS) and the assessment of the budgetary cost of the Commonwealth's debt portfolio.
The total face value of CGS on issue for the Commonwealth, including CGS held by the Commonwealth's Reserved Money Fund, was $106.5 billion at end-June 1999. Excluding the Reserved Money Fund holding, which does not constitute a Commonwealth liability, the net CGS on issue for the Commonwealth was $83.5 billion at end-June 1999.
In addition, the Treasury administers the redemption of Commonwealth Government security debt on allocation to the States and the Territories, with a face value of $1.8 billion of stock being on issue at end-June 1999. The Commonwealth ceased new money borrowings on behalf of the States and Territories in 1987-88 and ceased roll-over borrowings for the States and Territories from end-June 1990.
This publication mainly covers CGS on issue for the Commonwealth and operations in 1998-99 in relation to that debt. The first section provides details of the 1998-99 debt issue and debt repurchase program and the second section canvasses the Commonwealth's portfolio management in 1998-99. Then follow appendices dealing with the public debt interest cost of CGS in 1998-99, Commonwealth liaison with credit rating agencies and yield movements in the secondary market for CGS.
A series of further appendices provides statistical information on CGS issuance and redemption in 1998-99 and historical data on the stock of CGS on issue for the Commonwealth, the States and the Northern Territory. Details of the redemption of CGS on allocation to the States and Territories, and of their outstanding holdings of CGS, are provided in Appendix 7. Operations of the LCIR, a component of the Commonwealth's Reserved Money Fund, are detailed in Appendix 8.
This will be the last issue of the Commonwealth Debt Management Report published under the aegis of the Treasury.
In the May 1999 Budget, the Government announced that a specialist agency, to be known as the Australian Office of Financial Management, would be established within the Treasury portfolio from 1 July 1999. The Office, an agency prescribed under the Financial Management and Accountability Act 1997, will assume responsibility for the Commonwealth's debt management activities previously undertaken within the Department of the Treasury.
Material presented in the Commonwealth Debt Management Report will be included in the Annual Reports of the Australian Office of Financial Management.