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Informist, Thursday, Aug 8, 2024

By Richard Fargose

MUMBAI – Issuances of commercial papers rose today with some companies tapping the market as the outcome of the Reserve Bank of India's three-day Monetary Policy Committee's meeting was in line with expectations, dealers said.

Today, 24 bln rupees was raised through commercial papers as against 12.00 bln rupees on Wednesday. Indian Oil Corp and Larsen & Tourbo raised 8.5 bln rupees and 4.0 bln rupees, respectively, through papers maturing in September end at 7.10%. ONGC Petro additions Ltd raised 4 bln rupees via three-month papers at 7.39%.

ICICI Securities Ltd and Aditya Birla Finance Ltd also borrowed additional funds through the papers issued earlier this week at the same rate. ICICI Securities Ltd raised 2.5 bln rupees through three-month CPs at 7.69%, and Aditya Birla Finance Ltd borrowed 5 bln rupees through three-month CPs at 7.63%.

The RBI's Monetary Policy Committee today voted with a 4-2 majority to keep the policy repo rate unchanged at 6.50%. The committee also decided to maintain its stance at "withdrawal of accommodation" to ensure inflation progressively aligns with its target, while supporting growth.

In an Informist poll, all the 30 respondents had expected the committee to leave the repo rate unchanged at 6.50%. An overwhelming majority of the respondents also expected the committee to continue with the "withdrawal of accommodation" stance.

"Issuers and investors were both on the sidelines for the last two days, but with RBI policy outcome behind us, we expect issuances will rise from next week onwards as corporates will borrow to fund rollovers," said a dealer with a brokerage fund.

Dealers said commercial papers worth over 1.25 trln rupees and certificates of deposit worth over 600 bln rupees are due for maturity this month.

Market participants said despite a likely rise in issuance of such papers, rates are unlikely to rise as liquidity in the banking system is expected to remain in surplus.

Dealers said the RBI, while detailing the monetary policy outcome today, did not announce adverse measures such as open market operations to drain out excess liquidity from the banking system, which is an indication that liquidity will remain comfortable in the near term.

On Monday, the liquidity surplus in the banking system widened to 2.86 trln rupees, the highest since Jul 6, 2022, data from the RBI showed.

Owing to prevailing surplus liquidity in the banking system, CDs issuances remain subdued. Today, only Bank of Maharashtra raised 1 bln rupees through paper maturing in three months at a rate of 7.20%.

Rates on three-month CPs issued by non-banking finance companies were steady at 7.60-7.65%, while those on papers with similar maturities issued by manufacturing companies were steady at 7.15-7.20%. Rates on CDs maturing in three months were quoted at 7.15-7.20%.

--Primary market

* Indian Oil Corp, Larsen & Tourbo, ONGC Petro additions, ICICI Securities, Aditya Birla Finance Ltd raised funds through CPs

* Bank of Maharashtra issued CDs today.

--Secondary market

* Axis Bank's CD maturing on Friday dealt thrice at a weighted average yield of 6.8865%.

* Aditya Birla Finance Ltd's CP maturing on Friday was dealt four times at a weighted average yield of 6.7537%.

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 Akul Nishant Akhoury

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