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Informist, Tuesday, Aug 20, 2024

By Richard Fargose

MUMBAI – Primary market volumes of commercial paper and certificates of deposits were down today owing to the lack of big-ticket issuances, dealers said. So far on the day, CP worth 56.50 bln rupees were issued, compared with 99.05 bln rupees on Monday. Volumes surged on Monday as Reliance Retail Ventures raised 66 bln rupees through paper maturing in three months at 7.26%.

Market participants said that although the value of the issuances is down from Monday, the number of issuers remained largely steady.

Larsen & Toubro Ltd was the largest issuer today, raising 15 bln rupees through three-month papers at 7.23%. It was followed by ICICI Securities, which raised 12 bln rupees via three-month CP at 7.70%. L&T Finance raised 10 bln rupees through three-month paper at 7.60%.

Companies tapped the market to refinance maturing paper and to raise funds ahead of the festive season, dealers said.

Rates on commercial paper were steady as these were easily absorbed by the demand from mutual funds, dealers said.

Today, Federal Bank was the only bank to raise funds through nine-month and 11-month certificates of deposits, for a total of 13 bln rupees. On Monday, banks raised a total of 62.50 bln rupees.

Market participants expect CD issuances to rise in the coming months as deposit growth is lagging credit growth, which is prompting banks to rely on alternative sources of funding.

While bank deposits remain the dominant part of financial assets owned by households, its share has been declining with households increasingly allocating savings to mutual funds, insurance funds, and pension funds.

According to the latest data from the Reserve Bank of India, bank deposits grew 11.3% on year as of July 12, compared with 14.0% growth in credit.

“On our part, we will try to fill the credit-deposit gap by increasing borrowing via other sources like short-term borrowings, certificates of deposit,” said a dealer with a mid-size private bank.

Rates on three-month CP issued by non-banking finance companies were steady at 7.55-7.60%, and those on paper of similar maturity 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

* Larsen & Toubro, ICICI Securities, L&T Finance, HDFC Securities, Kotak Securities, Motilal Oswal Financial Services, Tata Motors Finance, Redington India, Godrej industries, and Godrej Agrovet raised funds through CP.

* Federal Bank raised funds via CDs.

--Secondary market

* Canara Bank's CD maturing on Wednesday was dealt twice at a weighted average yield of 6.5347%.

* CP of ICICI Securities maturing Wednesday was dealt at a weighted average yield of 6.6077%.

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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