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Informist, Tuesday, Jul 16, 2024

By Siddhi Chauhan

MUMBAI – Fundraising through commercial papers rose today as big-ticket issuers such as Bajaj Finance and Larsen and Toubro Ltd tapped the primary market for their working capital requirements, dealers said. So far, CP issuances rose to 67.50 bln rupees against 36 bln rupees on Monday. 

Bajaj Finance was the largest issuer of CPs today, raising 28 bln rupees through papers maturing in three months at a rate of 7.65%. L&T raised 15 bln rupees through CPs maturing in January end at a rate of 7.47%. 

Had it not been for these frequent borrowers, CP issuances would have fallen today compared to Monday, dealers said, adding that despite a decent amount of supply, most of the mutual funds were said to have been on the sidelines. Money managers are refraining from buying papers at the moment as they expect rates to go up in the coming days, which will make it more lucrative. 

"Investors, especially mutual funds, are not buying heavily as they want higher rates, which are not seen right now," a dealer at a mid-size brokerage fund said. "This is why they are waiting for goods and service tax outflows."

GST outflows which generally start in the third week of every month, drains around 1 trln rupees from the banking system. A decrease in the system's liquidity will increase the rates on the short-term debt instruments, dealers said. The liquidity surplus in the banking system narrowed to 828.75 bln rupees on Monday from 938.71 bln rupees on Sunday, data from the Reserve Bank of India showed.

On the other hand, issuances through certificates of deposits fell to 10 bln rupees against 47.50 bln rupees on the previous day. Punjab National Bank and Bank of Maharashtra were the only issuers today. 

Punjab National Bank raised 7 bln rupees through two CDs, one maturing in three months and the other in one year at a rate of 7.12% and 7.61%, respectively. According to dealers, banks raised funds as some of their CDs are set to mature in the coming days, dealers said. On Monday, HDFC Bank raised 37.50 bln rupees through 3-month CDs at a rate of 7.14% for a similar purpose.

Overall, rates on short-term debt instruments remained largely steady, dealers said. Rates on three-month CPs issued by non-banking finance companies were quoted at 7.70-7.85%, while those of similar maturity issued by manufacturing companies were at 7.17-7.37%. Rates on CDs were quoted at 7.10-7.30%.

--Primary market

* Poomawala Fincorp, Godrej Industries, Motilal Oswal Financial Services, Tata Projects, Muthoot Finance, Axis Securities, JK Cements, SBICAP Securities, L&T Ltd raised funds through CPs

* Punjab Bank and Bank of Maharashtra raised funds through CDs

--Secondary market

* Punjab National Bank's CD maturing on Jul 22 was dealt four times at a weighted average yield of 6.8027%.

* Small Industries Development Bank of India's CP maturing on Jul 18 was dealt 16 times at a weighted average yield of 6.4432%.

At 1700 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

End

With inputs from Sachi Pandey

Edited by Tanima Banerjee

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