More Stories

Informist, Monday, Aug 5, 2024

By Richard Fargose

MUMBAI – Funds raised by corporates through commercial papers surged today due to big-ticket issuances by National Bank for Agriculture and Rural Development and Reliance Industries Ltd. CPs worth 93.00 bln rupees were issued today compared with 52.25 bln rupees on Friday.

National Bank for Agriculture and Rural Development was the largest issuer of CPs today by raising 40 bln rupees through a three-month paper at 7.20%. Market participants said the company tapped the market to roll over papers set to mature in the coming days.

NABARD has CPs worth 237 bln rupees that are due for maturity this month, of which CPs worth 72 bln rupees are scheduled this week, as per data compiled by Cogencis.

Reliance Industries raised 35 bln rupees through papers maturing in September end at 7.14%, dealers said.

Reliance Industries tapped the short-term debt market to take advantage of the huge surplus liquidity in the banking system to raise funds at lucrative rates, dealers said.

The papers floated by big-ticket issuers were readily absorbed due to their low-risk profile, dealers said.

Rates on three-month CPs issued by non-banking finance companies fell by 10 basis points to 7.60-7.65% from 7.70-7.75% on Friday. Rates on similar-maturity papers issued by manufacturing companies were steady at 7.20-7.25%.

Market participants expect short-term rates to stay in a narrow range in the near-term days as liquidity conditions are expected to remain comfortable with no major outflows lined up. 

The liquidity surplus in the banking system widened to 2.78 trln rupees on Saturday, the highest since Jul 6, 2022, data from the RBI showed. Inflows on account of the government's month-end spending last week boosted the liquidity in the banking system, dealers said. Inflows of around 1.50 trln rupees from the spending have hit the banking system, they said.

Owing to the huge surplus in the banking system, fundraising through certificates of deposit remains subdued. Only Punjab & Sind Bank raised 14 bln rupees through CDs. On Friday, banks raised 27 bln rupees via certificates of deposit. 

"Due to surplus liquidity, banks are buying up to one-month papers as they seek to park their excess funds," said a dealer with a large brokerage firm. "While mutual funds were selling these (one-month) papers, and making some space to invest in primary issues."

Rates on CDs maturing in three months were quoted at 7.10-7.25%.

--Primary market

* NABARD, Reliance Industries, Bajaj Financial Securities, L&T Finance, and Kotak Securities raised funds through CPs

* Punjab & Sind Bank raised funds through CDs

--Secondary market

* Bank of Maharashtra's CD maturing on Aug 26 was dealt thrice at a weighted average yield of 6.9207%.

* NABARD's CP maturing on Sep 3 was dealt twice at a weighted average yield of 6.9053%.

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 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.