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Informist, Monday, Aug 19, 2024

By Richard Fargose

MUMBAI – Fundraising through commercial paper and certificates of deposits surged today as companies and banks tapped the market to refinance maturing paper amid firm demand from mutual funds, dealers said.

So far today, CP worth 99.05 bln rupees were issued, compared with 10.00 bln rupees issued on Friday. Of the total, Reliance Retail Ventures raised 66 bln rupees through paper maturing in three months at 7.26%. Market participants said the company tapped the market to roll over papers set to mature in the coming days and to meet funding needs ahead of festivals.

Reliance Retail Ventures has CP worth 81.50 bln rupees set to mature this month, of which paper worth 15 bln rupees are due to mature this week, as per data compiled by Cogencis.

"Issuers were very active today, so were the MFs," said a dealer with a brokerage firm.

Fund demand from banks also remained strong as the rates are expected to rise slightly this week, dealers said.

The liquidity surplus in the banking system was at 1.64 trln rupees on Sunday against 1.55 trln rupees on Friday, data from the RBI showed. Market participants expect the banking system liquidity to turn neutral in the current week due to outflows from the payment of goods and services tax scheduled Tuesday and Wednesday. "The outflow on account of GST payment will be around 1.50-1.60 trln rupees," a dealer from a state-owned bank said.

Banks raised a total of 62.50 bln rupees today, against 38 bln rupees on Friday. Despite the surge in issuances, rates were steady as these certificates of deposit were easily absorbed by the demand from mutual funds, dealers said.

Rates on three-month CP issued by non-banking finance companies were steady at 7.60-7.65%, and those 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

* Reliance Retail Ventures, Tata Capital, Birla Group Holdings, Tata Capital Housing Finance, Kotak Securities, Motilal Oswal Financial Services, Axis Securities, Tata Motors Finance, Aditya Birla Money, and Pilani Investment and Industries Corp raised funds through CP

* Bank of India, IndusInd Bank, and Punjab National Bank raised funds via CDs.

--Secondary market

* Indian Bank's CD maturing on Tuesday was dealt nine times at a weighted average yield of 6.4927%.

* National Bank for Agriculture and Rural Development's CP maturing on Sep 2 was dealt at a weighted average yield of 6.8901%.

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 Rajeev Pai

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