More Stories

Informist, Friday, Sep 6, 2024

By Siddhi Chauhan

MUMBAI – Borrowing through commercial paper remained muted for the second consecutive day as most companies which were in need of short-term funds had already borrowed at the beginning of the week, dealers said.

CP issuances inched up to 14 bln rupees from 9.50 bln rupees on Thursday, but were still much lower than the average quantum of 117.6 bln rupees raised in the first three days of the week. After a few days of heavy CP issuances, the requirement for funds cooled as the demand was met, dealers said.

Had HDFC Securities not tapped the short-term debt market, CP issuances would have fallen below even that of the previous day, dealers said. HDFC Securities was the largest issuer, raising 11 bln rupees through paper maturing in three months at 7.78%.

The remaining amount was cumulatively raised by Birla Group Holdings, Pilani Investments, Axis Securities, Julius Bear Capital, and Axis Securities. On Thursday, Larsen & Toubro raised 4.50 bln rupees through CP maturing in three months at 7.25% and Aditya Birla Finance raised 3.50 bln rupees through CP maturing in three months at 7.64%.

A dealer with a mutual fund said many potential borrowers had already tapped the market fearing a cash crunch due to upcoming festivals, which meant that not many corporations were in need of funds today.

After raising around 100 bln rupees through certificates of deposit on Thursday, banks did not tap the short-term debt market at all today due to the lack of a requirement for funds, dealers said. 

Banks were flush with funds also as the liquidity surplus increased due to inflows on account of government month-end spending. Inflows worth around 1-1.15 trln rupees entered the banking system on this count since last week, dealers said. 

On Thursday, the liquidity surplus in the banking system was 2.55 trln rupees, slightly higher than 2.46 trln rupees on Wednesday, according to data from the Reserve Bsnk of India. The surplus widened due to possible regular government spending, dealers said.

"Today very few banks have raised CDs because there is very little demand for funds as participants have enough funds with them," a dealer at a state-owned bank said. "Also I don't think any paper is set to mature in the coming days."

CD issuances are expected to pick up next week as tax outflows are expected to drain around 400-500 bln rupees from the banking system, 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 maturity issued by manufacturing companies were unchanged at 7.25-7.30%. Rates on CDs maturing in three months were at 7.20-7.25%.

--Primary market

* HDFC Securities, Birla Group Holdings, Pilani Investments, Axis Securities, Julius Bear Capital, and Axis Securities raised funds through CP.

* No funds were raised via CDs.

--Secondary market

* HDFC Bank's CD maturing on Dec 6 was dealt 14 times at a weighted average yield of 7.2802%.

* Export and Import Bank of India's CP maturing on Monday was dealt six times at a weighted average yield of 6.4196%.

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

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.