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Informist, Monday, Sep 9, 2024

MUMBAI – Borrowing in the short-term debt market rose from the previous day due to a few big-ticket issuances which made up most of the fundraising today. Issuances through commercial papers rose to 54.25 bln rupees from 14 bln rupees on Friday, while issuances through certificates of deposits were at 60 bln rupees, against no issuances on Friday.

Today, ICICI Securities, LIC Housing Finance and Kotak Securities collectively raised 43 bln rupees through CPs. The remaining amount was raised by Godrej Consumer Products, Godrej Industries, Axis Securities, Birla Group Holdings, Pilani Investments, IGH Holdings and Chola Securities. 

ICICI Securities raised 23 bln rupees through two CPs maturing in three months at rates of 7.76% and 7.77%. LIC Housing Finance raised 10 bln rupees through CPs maturing in three months at 7.32%, while Kotak Securities raised 10 bln rupees through CP maturing in three months at 7.78%. 

On Friday, HDFC Securities was the largest issuer, raising 11 bln rupees through papers maturing in three months at 7.78%. The remaining amount of 3 bln rupees was cumulatively raised by Birla Group Holdings, Pilani Investments, Axis Securities, Julius Bear Capital, and Axis Securities.

Issuances through certificates of deposit rose as banks stepped up their borrowings in anticipation of a cyclical rise in demand for credit at the end of the financial quarter. Bank of Baroda raised 50 bln rupees through CDs maturing in three months at a rate of 7.28%, while Federal Bank raised 10 bln rupees through papers maturing in a year at a rate of 7.81%. 

Bank of Baroda tapped the short-term debt market to roll over papers maturing this month, while Federal Bank tapped the market to finance its requirement for funds, dealers said. 

Some banks that wanted to issue CDs backed off as rates on three-month papers inched up to 7.24-7.28% from 7.20-7.24% last week, dealers said. "Currently, banks are in need of funds as September is the quarter end, so in order to improve their deposit growth they would borrow through CDs towards quarter end," a dealer at a private bank said. "But taking advantage of this, mutual funds have increased the rates on three month CDs." 

Facing an imbalance in credit and deposit growth, banks have been relying on CDs as a stop-gap measure to fund credit growth. As per latest data, banks' loan book growth remained higher than that of bank deposits. Bank deposits rose 10.9% on year to 213.28 trln rupees as of Aug 9, compared with loan book growth of 13.6% on year.

Rates on three-month CPs issued by non-banking finance companies were steady at 7.60-7.65%, and those on papers of similar maturity issued by manufacturing companies were unchanged at 7.25-7.30%.
 

--Primary market

* ICICI Securities, LIC Housing Finance and Kotak Securities, Godrej Consumer Products, Godrej Industries, Axis Securities, Birla Group Holdings, Pilani Investments, IGH Holdings and Chola Securities raised funds through CP.

* Federal Bank, Union Bank and Bank of Baroda funds raised via CDs.

--Secondary market

* HDFC Bank's CD maturing on Dec 6 was dealt 9 times at a weighted average yield of 7.2791%.

* National Housing Bank's CP maturing on Monday was dealt eight times at a weighted average yield of 6.4005%.

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 Avishek Dutta

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