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Informist, Wednesday, Aug 14, 2024

By Richard Fargose

MUMBAI – Fundraising through commercial paper was down today as market participation remained subdued with mutual funds expecting rates to rise slightly next week, dealers said. Market participants said that while mutual funds have money to deploy in primary issuances, they are not investing aggressively in the expectation that rates will rise next week as liquidity will narrow further due to goods and services tax outflows.

The liquidity surplus in the banking system widened to 1.26 trln rupees on Tuesday from 1.13 trln rupees on Monday, data from the RBI showed.

So far today, CP worth 40.30 bln rupees were issued, against 83.25 bln rupees issued Tuesday. Of the total, Reliance Industries Ltd raised 20 bln rupees through CP maturing at September-end at 7.12%.

"We could have raised 50-100 crore (500 mln-1 bln rupees) more, but rates are moving slightly higher as MFs (mutual funds) expect better rates next week,” said an official with a non-banking finance company.

Owing to surplus liquidity and subdued demand from mutual funds, banks avoided raising funds via certificates of deposits. On Tuesday, banks raised around 47.50 bln rupees.

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

Rates on three-month CP issued by non-banking finance companies were steady at 7.60-7.65%, and rates on paper 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, Aditya Birla Finance, Aditya Birla Housing Finance, Poonawalla Fincorp, Reliance Industries, and Godrej Industries raised funds through CPs

* No banks raised funds via CDs.

--Secondary market

* Indian Bank's CD maturing on Oct 1 was dealt four times at a weighted average yield of 7.1612%.

* Bajaj Finance's CP maturing on Friday was dealt six times at a weighted average yield of 6.6089%.

At 1700 IST, the following were the volumes, in billion rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

End

Edited by Rajeev Pai

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