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Informist, Thursday, Jul 25, 2024

By Siddhi Chauhan

MUMBAI – Fundraising through certificates of deposit rose today as banks borrowed to fund upcoming maturity of papers issued by them, dealers said. Today issuances through CDs rose sharply to 85.75 bln rupees from 28.50 bln rupees on Wednesday.

Canara Bank, ICICI Bank and Punjab National Bank were the only issuers that tapped the short-term debt market. Of the three, Punjab National Bank borrowed 30 bln rupees through three-month CDs at a rate of 7.15%. ICICI Bank raised 15 bln rupees through papers maturing in a year at 7.58%. Canara Bank borrowed 13.75 bln rupees through CDs maturing in three months at 7.14%.

"CD issuances were high today because several papers are set to mature, so banks are opting for a roll-over," a dealer at a state-owned bank said. "This is the reason why, despite a rise in liquidity surplus, CD issuances have also risen." These papers are said to mature in this and the coming month, according to Informist data.  

Comfortable liquidity conditions kept more issuers from tapping the market, dealers said. The liquidity surplus widened slightly to 587.03 bln rupees on Wednesday, against 423.74 bln rupees on Tuesday, data from the Reserve Bank of India showed. The liquidity surplus in the banking system widened because of inflows on account of government spending and tax refunds from the government.

In the coming days, the liquidity surplus is expected to increase further due to scheduled redemption of 8.40%, 2024 gilt worth 609.45 bln rupees, which will take place on Friday.

On the other hand, fundraising through commercial papers fell sharply today due to the absence of big-ticket issuances which had pushed up fundraising numbers in the last few days, dealers said. Fundraising through the short-term debt instrument fell to 32.00 bln rupees against 85.75 bln rupees on the previous trading day.

The major chunk of borrowing through CPs was done by the Export and Import Bank of India, which raised 25 bln rupees through paper maturing in six months at 7.42%. The remaining 7 bln rupees were borrowed by Godrej Properties, Indian Oil Corp, and Aditya Birla Finance. On Wednesday, NTPC Ltd alone had raised 31 bln rupees while HDFC Securities had raised 15 bln rupees and Tata Motor Finance had raised 10 bln rupees. 

Rates on three-month CPs remained 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

* Indian Oil Corporation, Godej Properties, Aditya Birla Finance, and Export and Import Bank of India raised funds through CPs

* Punjab National Bank, ICICI Bank, and Canara Bank raised funds through CDs

--Secondary market

*HDFC Bank's CD maturing on Jul 26 was dealt thrice at a weighted average yield of 6.5566%.

*ONGC Petro Additions Ltd's CP maturing on Jul 29 was dealt four at a weighted average yield of 7.1962%.

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 Aditya Sakorkar

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