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Informist, Friday, Aug 2, 2024

By Sachi Pandey

MUMBAI – Funds raised through commercial papers surged today due to big-ticket issuances by oil companies, who took advantage of comfortable liquidity conditions to raise funds at lucrative rates. CPs worth 52.25 bln rupees were issued today compared with 16 bln rupees on Thursday.

Hindustan Petroleum Corp was the largest issuer of CPs. The state-owned company raised 35 bln rupees through two papers. The company raised 20 bln rupees through CPs maturing Sep 24 at 7.07% and 15 bln rupees through CPs maturing on Sep 26 at 7.10%.

Indian Oil Corp also tapped the short-term debt market, raising 16.50 bln rupees through papers maturing on Sep 17 at 7.07%.

"We don't usually see these companies come to the market. They might have had some requirements and the rates are really lucrative for them to raise funds through this route; 7.07-7.10% is a good rate," a dealer at a large-sized brokerage firm said.

Rates on three-month CPs issued by non-banking finance companies remained flat at 7.65-7.85%. Rates on similar maturity papers issued by manufacturing companies were also steady at 7.19-7.39%.

Market participants expect rates to stay in a narrow range for a few days as liquidity conditions are expected to remain comfortable in the near term, with no major outflows lined up. The liquidity surplus in the banking system widened to 1.97 trln rupees on Thursday, the highest since Aug 10, from 1.56 trln rupees on Wednesday, data from the Reserve Bank of India showed.

Meanwhile, fundraising through certificates of deposit fell. Banks raised 27 bln rupees through CDs, compared to 53.50 bln rupees on Thursday. "Mutual funds were quoting 1-2 bps (basis points) higher rates, but banks are reluctant to raise rates because they currently have sufficient liquidity," another dealer stated. Rates on CDs maturing in three months were quoted at 7.10-7.30%.

Only Canara Bank and AU Small Finance Bank raised funds through CDs. Canara Bank raised a total 23 bln rupees through papers maturing in February and March at 7.44%. AU Small Finance Bank raised 4 bln rupees through CDs maturing in five months at 7.78%.

"Today's CD issuances were lower than the previous day because of the liquidity conditions," a dealer at a private bank said. "The banking system has received good inflows from government spending and even more is expected to come."

--Primary market

* HPCL, Indian Oil Corp, and Birla Group Holdings raised funds through CPs

* Canara Bank and AU Small Finance Bank raised funds through CDs

--Secondary market

* Bank of Baroda's CD maturing in February 2025 was dealt thrice at a weighted average yield of 7.4051%.

* Larsen and Toubro's CP maturing on Aug 30 was dealt twice at a weighted average yield of 6.9998%.

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 Siddhi Chauhan

Edited by Ashish Shirke

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