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Informist, Wednesday, Sep 11, 2024

By Siddhi Chauhan

MUMBAI – Borrowing in the short-term debt market fell sharply as lack of investment demand from mutual funds prompted potential issuers to remain on the sidelines, dealers said. Issuances through commercial papers fell to 21.75 bln rupees from 24.50 bln rupees on Tuesday, while the same through certificates of deposit also fell to 71.00 bln rupees against 150 bln rupees on the previous day. 

Today, Small Industries Development Bank of India was the largest issuer of CPs, followed by Tata Capital. SIDBI raised 13.75 bln rupees through CPs maturing in three months at a rate of 7.31%. Meanwhile, Tata Capital raised a total of 5 bln rupees through two CPs maturing in three months and one year at 7.67% and 7.85%, respectively.

The remaining amount was raised by Godrej Industries and Bajaj Finance Securities. On Tuesday, Shriram Finance was the largest issuer, raising 12 bln rupees through CPs maturing in three months at 7.85%.

Mutual funds were not that active in the primary market as the rates on the paper were not lucrative for them to buy, dealers said. "The appetite of mutual funds is low today. They are not getting the desired rates here," a dealer at a mid-sized brokerage firm said. "This is why they are holding tight and not buying as they expect the rates to go up as we are nearing the quarter-end."

Rates on three-month CPs issued by non-banking finance companies and manufacturing companies were flat at 7.60-7.80% and 7.25-7.45%, respectively. 

Similarly, CD issuances also fell in comparison to the previous day. Today, HDFC Bank was the sole issuer to tap the short-term debt market, raising 71 bln rupees through CDs maturing in three months at a rate of 7.29%. 

On Tuesday, the State Bank of India alone had raised 100 bln rupees through CDs maturing in three months at 7.24%, dealers said. Canara Bank also raised 35 bln rupees through CDs maturing in three months at 7.28%, while Punjab and Sind Bank raised 15 bln rupees at 7.34% through three-month CDs.   

After a massive 150 bln rupees worth of CD issuances on Tuesday, mutual funds lost their appetite today, and were seen selling papers in the secondary market, dealers said. 

"Mutual funds activity is concentrated in the secondary market today, they are not interested in buying aggressively after their heavy buying yesterday (Tuesday)," a dealer at another brokerage firm said. "This is the reason that we are seeing them selling papers that are maturing in the coming weeks." The rates on CDs maturing in three months rose to 7.30-7.50%.

--Primary market

* Small Industries Development Bank of India, Tata Capital, Godrej Industries, and Bajaj Financial Securities and raised funds through CPs.

* HDFC Bank raised funds via CDs.

--Secondary market

* IDBI Bank's CD maturing on Wednesday was dealt six times at a weighted average yield of 6.6089%.

* Export and Import Bank of India's CP maturing on Wednesday was dealt six times at a weighted average yield of 6.5481%.

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 Aditya Sakorkar

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