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Informist, Monday, Aug 12, 2024

By Richard Fargose

MUMBAI – Rates on commercial papers rose slightly today as issuances of such instruments remained firm. Companies raised money for fresh funding requirements and rolled over maturing papers, dealers said.

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 up 5 basis points at 7.20-7.25%. Rates on certificates of deposit maturing in three months were also up 5 bps at 7.15-7.20%.

Companies raised 40.75 bln rupees through commercial papers against 56.75 bln rupees raised on Friday. On Thursday, the issuance of such papers was 24.00 bln rupees.

Export-Import Bank of India was the largest issuer of CPs. It raised 21.25 bln rupees through a six-month paper at 7.46%. HDFC Securities raised 8.50 bln rupees through papers maturing in three months at 7.71%.

Aditya Birla Finance Ltd, ICICI Securities Primary Dealership, Bajaj Financial Securities, ICICI Securities, and Birla Group Holdings also raised funds through commercial papers.

"As liquidity is expected to narrow further next week, investors are seeking slightly higher rates now," said a senior dealer with a brokerage firm.

The liquidity surplus in the banking system narrowed sharply last week on account of excise and tax-deducted-at-source payments and outflows due to the Reserve Bank of India's aggressive intervention in the foreign exchange market, dealers said.

The liquidity surplus in the banking system was 1.22 trln rupees on Sunday against 2.86 trln rupees on Aug 5, data from the RBI showed. Market participants see liquidity narrowing further in the current fortnight due to GST outflows scheduled next week.

CP issuances are expected to rise in the coming days as companies will borrow to fund rollovers, dealers said. CPs worth over 1.25 trln rupees and CDs of over 600 bln rupees are due for maturity this month, they said.

Owing to prevailing surplus liquidity in the banking system, banks did not raise funds through CD issuances.

--Primary market

* Export and Import Bank of India, HDFC Securities, Aditya Birla Finance, ICICI Securities Primary Dealership, Bajaj Financial Securities, ICICI Securities, and Birla Group Holdings raised funds through CPs

* Banks did not issue CDs today.

--Secondary market

* Axis Bank's CD maturing on Jul 16, 2025 was dealt four times at a weighted average yield of 7.6250%.

* Reliance Retail Ventures Ltd's CP maturing on Wednesday was dealt twice at a weighted average yield of 6.7915%.

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 Ashish Shirke

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