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Informist, Tuesday, Aug 13, 2024

By Richard Fargose

MUMBAI – Fundraising through commercial papers and certificates of deposits surged today as companies and banks tapped the market to refinance the maturing papers, dealers said.

So far today, CPs worth 83.25 bln rupees have been issued, compared with 40.75 bln rupees issued Monday. Of the total, Reliance Retail Ventures raised 66 bln rupees through CPs maturing in three months at 7.24%. Market participants said the company tapped the market to roll over papers set to mature in the coming days and for funding needs ahead of festivals.

Reliance Retail Ventures has CPs worth 81.50 bln rupees that are due to mature this month, of which CPs worth 40 bln rupees are to mature this week, as per data compiled by Cogencis.

"Majority of the deals were rollover issuances," said a dealer with a brokerage firm. "They (banks) were on sidelines last week as the liquidity was in huge surplus, but now as surplus has narrowed sharply, they are hitting the market."

The liquidity surplus in the banking system was 1.13 trln rupees on Monday against 2.86 trln rupees a week ago, Reserve Bank of India data showed. Market participants see liquidity narrowing further in the current fortnight due to GST outflows next week.

Some banks also raised funds to roll over maturing papers. HDFC Bank and Bank of Baroda raised 17.50 bln rupees and 20 bln rupees, respectively, through three-month papers at 7.17%.

HDFC Bank has CDs worth 68.50 bln rupees due for maturity on Wednesday, while CDs worth 30 bln rupees of Bank of Baroda are scheduled for redemption later this week.

Despite the surge in issuances, rates were steady as these papers were easily absorbed by mutual funds demand, dealers said.

Rates on three-month CPs issued by non-banking finance companies were steady at 7.60-7.65%, and those on papers of similar maturities issued by manufacturing companies were unchanged at 7.20-7.25%. Rates on CDs maturing in three months were at 7.15-7.20%.

--Primary market

* Axis Securities, ICICI Securities, Reliance Retail Ventures, Aditya Birla Finance, Tata Motors Finance, and Bajaj Financial Securities raised funds through CPs

* HDFC Bank, Bank of Baroda, and Indian Bank raised funds via CDs.

--Secondary market

* HDFC Bank's CD maturing on Wednesday was dealt 15 times at a weighted average yield of 6.4616%.

* National Bank for Agriculture and Rural Development's CP maturing on Wednesday was dealt seven times at a weighted average yield of 6.4458%.

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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