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Informist, Friday, Aug 9, 2024

By Richard Fargose

MUMBAI – Issuances of commercial papers surged today as companies borrowed funds after staying on the sideline for the last couple of days due to uncertainty around the outcome of the Reserve Bank of India's Monetary Policy Committee's meeting, dealers said.

Today, companies raised 56.75 bln rupees through commercial papers, more than double of 24.00 bln rupees issued on Thursday.

Export-Import Bank of India was the largest issuer of CPs today, raising 25 bln rupees through a three-month paper at 7.18%. Reliance Retail Ventures also tapped the short-term debt market, raising 15.00 bln rupees through papers maturing in three months at 7.22%.

Indian Oil Corp, ICICI Securities, Reliance Retail Ventures, Aditya Birla Fashion and Retail, Aditya Birla Housing Finance, and Aditya Birla Finance also raised funds via three-month papers today.

"Most borrowers were waiting for the policy outcome," said an official with a non-banking financial company. "Mutual funds are sitting on a lot of cash, and liquidity is also comfortable. We got a better rate today despite a large issue size."

On Thursday, the RBI's Monetary Policy Committee voted with a 4-2 majority to keep the policy repo rate unchanged at 6.50%. Moreover the RBI officials did not express any concerns over excess liquidity or didn’t announce any measures to drain liquidity.

The liquidity surplus in the banking system was at 1.66 trln rupees on Thursday against 1.98 trln rupees on Wednesday, data from the RBI showed.

Market participants expect a rise in CP issuances from next week onwards as corporates will borrow to fund rollovers.

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

Market participants said despite a likely rise in issuance of such papers, rates on certificates of deposits and commercial papers issued by manufacturing companies moved lower due to strong demand from mutual funds.

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 down 5 basis points to 7.15-7.20%. Rates on CDs maturing in three months were also down 5 bps to 7.10-7.15% today.

Owing to prevailing surplus liquidity in the banking system, no bank raised funds through CDs issuances today.

--Primary market

* Indian Oil Corp, ICICI Securities, Reliance Retail Ventures, Aditya Birla Fashion and Retail, Aditya Birla Housing Finance, Aditya Birla Finance Ltd, and Export-Import Bank of India raised funds through CPs

--Secondary market

* Indian Bank's CD maturing on Mar 10 dealt five times at a weighted average yield of 7.4680%.

* Cholamandalam Investment and Finance Co Ltd's CP maturing on Oct 30 was dealt six times at a weighted average yield of 7.8095%.

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 Deepshikha Bhardwaj

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