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Informist, Friday, Aug 16, 2024

By Richard Fargose

MUMBAI – Issuances of certificates of deposits rose today as banks raised funds to refinance the maturing papers, dealers said. So far today, CDs worth 38.00 bln rupees were compared with nil on Wednesday.

Indian Bank raised 30 bln rupees via three-month papers at 7.20% and Bank of Baroda raised 8 bln rupees through three-month papers at 7.18%. Rates were steady despite the increase in issuances as mutual funds easily absorbed the papers, dealers said.

“Rates were largely steady, and moved in a narrow range of 2-3 basis points,” said a dealer with a brokerage firm. 

Market participants said despite rates being largely steady, Indian Bank’s three-month papers today were priced 2 basis points higher than its earlier issue on Tuesday. "Due to the large volume from a bank, primary rates were 1-2 bps higher, but overall rates were steady," a dealer with a big state-owned bank said.

Most market participants expect the rates to rise slightly next week as the liquidity surplus in the banking system is likely to narrow due to outflows on account of goods and services tax payments.

So far today, CPs worth 10 bln rupees were issued compared with 40.30 bln rupees on Wednesday. ICICI Securities and Aditya Birla Finance raised 3 bln rupees and 5 bln rupees, respectively, at similar rates as on Wednesday.

CP and CD issuances are expected to rise in the coming days as companies 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.

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 Finance, ICICI Securities, and Aditya Birla Finance raised funds through CPs

* Bank of Baroda and Indian Bank raised funds via CDs today.

--Secondary market

* Punjab National Bank's CD maturing on Oct 1 was dealt three times at a weighted average yield of 7.1496%.

* Bajaj Finance's CP maturing on Sep 12 was dealt four times at a weighted average yield of 7.1697%.

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 Saji George Titus

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