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Informist, Friday, Jul 19, 2024

By Siddhi Chauhan 

MUMBAI – Punjab National Bank was the lone issuer of certificates of deposit today, raising 10 bln rupees at 7.61% through papers maturing in one year. The state-owned bank tapped the market to meet fresh capital requirements for funds and to roll over papers set to mature in the coming days, dealers said.
 

On Thursday, Bank of Maharashtra was the sole issuer of CDs borrowing 3 bln rupees through 3-month papers at 7.20%. Banks refrained from tapping the short-term debt market because of uncertainty ahead of the full Union Budget for 2024-25 (Apr-Mar) and as there was little need for funds amid surplus liquidity in the banking system.

The anticipation of an increase in government spending post budget has kept many investors on the sidelines. The Union Budget which is scheduled to be announced on Tuesday, will provide further clarity on the government's plan for various schemes. Currently, the surplus in the banking system widened to 1.39 trln rupees on Thursday from 1.15 trln rupees on Wednesday, data from the Reserve Bank of India showed. 

"Earlier, we were expecting the rates to fall in coming days due to GST (goods and services tax) outflows, but still people are waiting for the budget," a dealer at a private bank said. "There are expectations of the government coming up with many schemes which will be farmer centric, that will add on to the current liquidity conditions."

There were no issuances through commercial papers today, against 16.75 on the previous day. Companies did not tap the market with CPs today due to continuous demand supply mismatch. On Thursday, Bajaj Financial Securities was the biggest issuer, raising 13 bln rupees through papers maturing in three months at a rate of 7.80%.

"No CP deal took place because investors and issuers were not able to come to an agreement regarding rates," a trader at a mid-size brokerage firm said. As a result, the papers maturing in August, September and March gained traction as mutual funds started selling these papers, dealers said.

"All the activity that we are seeing right now is buy-sell from mutual funds, which is being done in order to meet their three-month funds mandate." 
 

With little demand from mutual funds, rates on three-month CPs 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

* Punjab National Bank raised funds through CDs

--Secondary market

* Punjab National Bank's CD maturing on Jul 22 was dealt five times at a weighted average yield of 6.5127%.

* Grasim Industries's CP maturing on Oct 11 was dealt once at a weighted average yield of 7.1799%.

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 Vidhi Verma

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