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[I] Short-Term Debt: NBFC CP rates inch up on firm issuances

Informist, Monday, Aug 26, 2024

By Richard Fargose

MUMBAI – Rates on commercial papers issued by non-banking finance companies and brokerage firms rose today due to firm issuances, dealers said.

Rates on three-month CP issued by non-banking finance companies rose to 7.60-7.65% from 7.55-7.60% on Friday, while those on two-month papers rose 15 basis points to 7.60-7.65%.

"CP issuances have risen this month, especially NBFCs and securities companies," said a dealer with a large brokerage firm. "Although overall demand was steady for absorbing the new issuances, some mutual funds are now selective in buying such papers."

So far today, CPs worth 18.25 bln rupees have been issued, compared with 31.25 bln rupees issued on Friday. Bajaj Finance was the largest issuer, raising 10 bln rupees through three-month papers at 7.59%.

Last week, several companies tapped the market to refinance maturing papers and raise funds ahead of the festival season. CPs worth over 1.25 trln rupees and CDs of over 600 bln rupees are due for maturity this month, they said.

CP issuances during Apr-Jul increased to 4.86 trln rupees from 4.72 trln rupees in the corresponding period of the last year, driven by higher borrowing by NBFCs, the Reserve Bank of India's August bulletin said.

CPs worth around 1.15 trln rupees were issued so far this month, 7% higher than the entire last month.

Rates on three-month papers issued by manufacturing companies remained steady at 7.25-7.30%. Rates on CDs maturing in three months were also unchanged at 7.20-7.25% today.

Most banks have raised their deposit rates amid rising competition and are still increasingly relying on bulk term deposits and certificates of deposit to fund their asset growth.

CD issuances during Apr 1-Aug 20 surged to 3.77 trln rupees, up 66% from 2.28 trln rupees issued in the corresponding period of last year.

--Primary market

* Bajaj Finance, Kotak Mahindra Prime, Axis Securities, Axis Securities, and Axis Finance raised funds through CPs.

* No bank raised funds via CDs today.

--Secondary market

* Union Bank of India's CD maturing on Tuesday was dealt five times at a weighted average yield of 6.8991%.

* PNB Housing Finance’s CP maturing on Tuesday was dealt four times at a weighted average yield of 6.4446%.

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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