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Informist, Tuesday, Jul 30, 2024

By Siddhi Chauhan 

MUMBAI – After a day of muted issuances through certificates of deposit on Monday, issuances through the short-term debt instrument rose today, led by the country's largest lender, State Bank of India, dealers said. Today, banks raised around 30 bln rupees against 11.5 bln rupees on Monday. 

Today, three issuers tapped the short-term debt market, out of which State Bank of India was the largest. SBI tapped the short-term debt market after 14 months, raising 15 bln rupees through CDs maturing in three months at a rate of 7.08%. The bank had last tapped the short-term debt market in May 2023, when it raised 5 bln rupees through a paper that matured on May 17 this year at a coupon of 7.35%.

Various theories floated in the market regarding the same, while some said it was a move to cater to the bank's asset-liability management needs, others said it was a routine check to test its ease of borrowing. 

Apart from SBI, Bank of Baroda and AU Small Finance Bank also tapped the market today. Bank of Baroda issued 15 bln rupees through two CDs maturing in three and six months, respectively. The papers were issued at a rate of 7.14% and 7.41%, respectively. Meanwhile, AU Small Finance Bank raised 400 bln rupees through two CDs maturing in three and six months at 7.40% and 7.80%, respectively. 

On the contrary, issuances through commercial paper fell further with only issuances of 4.75 bln rupees taking place today, against 7.25 bln rupees in the previous trading session. Borrowing through the short-term debt instrument was tepid for the second consecutive day due to lack of demand from mutual funds facing redemption pressure towards the end of the month.

"Due to low demand from mutual funds, issuers are also not very eager to raise funds," a dealer at a mutual fund said. "This is a normal trend which will subside after the month end." 

Tata Capital Ltd and Julius Baer Capital were the only entities to raise funds through CPs today. Tata Capital raised 4.25 bln rupees through CPs maturing in three months at a rate of 7.62%, while Julius Baer Capital raised 1.50 bln rupees through CPs maturing in three months at a rate of 7.99%. 

Rates on three-month CPs remained at 7.65-7.85%, while those of similar maturity issued by manufacturing companies were at 7.19-7.39%. Rates on CDs were quoted at 7.10-7.30%. 

--Primary market

* Tata Capital Ltd and Julius Baer Capital raised funds through CPs

* State Bank of India, Bank of Baroda and AU Small Finance Bank raised funds through CDs

--Secondary market

*Bank of Maharashtra's CD maturing on Aug 26 was dealt once at a weighted average yield of 6.9694%.

*Tata Consumer Products Ltd's CP maturing on Jul 31 was dealt five times at a weighted average yield of 6.4616%.

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 Manisha Baxla

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