More Stories

Informist, Thursday, Jul 18, 2024

By Siddhi Chauhan

MUMBAI – It was a dull day in the short-term debt market today as most issuers kept to the sidelines due to a lack of demand from mutual funds, dealers said. Fundraising through commercial papers and certificates of deposit saw a sharp decline today from Tuesday. Money markets were shut on Wednesday on account of Muharram.

CP issuances fell to 16.75 bln rupees against 67.50 bln rupees on Tuesday. Bajaj Financial Securities was the biggest issuer, raising 13 bln rupees through papers maturing in three months at a rate of 7.80%. On Tuesday, Bajaj Finance raised 28 bln rupees through papers maturing in three months at 7.65%.

"Some of the deals which we were hearing did not happen because both parties were not able to come to an agreement," a dealer at a state-owned bank said. "Investors are demanding higher rates because they know that rates will soon go up after GST (goods and services tax) outflows." 

GST outflows, which generally start in the third week of every month, will drain 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 was at 1.15 trln rupees on Wednesday, data from the Reserve Bank of India showed.

The situation was similar in certificates of deposit as well. CD issuances fell to 3 bln rupees from 10 bln rupees on Tuesday. Bank of Maharashtra was the sole issuer of CDs today, borrowing 3 bln rupees through 3-month papers at 7.20%. 

On Tuesday, 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. 

Lack of demand from mutual funds and limited participation kept the rates on short-term debt instruments steady and trade volumes subdued, 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

* Godrej Agrovet, Bajaj Financial Securities, Kotak Securities, Aditya Birla Housing Finance, and Axis Securities raised funds through CPs

* Bank of Maharashtra raised funds through CDs

--Secondary market

* Union Bank's CD maturing on Jul 19 was dealt six times at a weighted average yield of 6.4616%.

* Godrej Consumer Products's CP maturing on Jul 19 was dealt thrice at a weighted average yield of 6.4379%.

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

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.