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Informist, Friday, Sep 13, 2024

By Sachi Pandey

MUMBAI – Fundraising through short-term debt instruments fell further today due to low demand from mutual fund houses, dealers said. Commercial papers worth only 4 bln rupees were issued today, compared with 7.5 bln rupees on Thursday.

"Mutual funds are short on cash as the quarter end is approaching. So mostly they are exiting from short-tenures," a dealer at a large sized brokerage firm said.

Only Sundaram Home Finance, Godrej Properties, and Godrej Agrovet raised funds through the short-term debt market. Sundaram Home Finance raised 2 bln rupees through papers maturing in 11 months at a rate of 7.85%.

"There were other offers as well, but no deal happened because issuers are asking for very low rates and mutual funds were not ready for those levels," a dealer at a mid-sized brokerage firm said.

There were no certificates of deposit issuances.

The rates on short-term debt instruments remained largely flat, even after the cancellation of two Treasury bill auctions worth 400 bln rupees for the rest of September, dealers said. "There is enough liquidity, so even the T-bill cut did not impact the short-term rates," the dealer with mid-sized brokerage firm said.

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. The rates on CDs maturing in three months were at 7.30-7.50%.

"Actually there are advanced tax outflows, so now the funds (mutual funds) are not able to buy openly. Once the funds get some liquidity, then the levels may go down further," a fund manager at a mid-sized mutual fund house said.

Liquidity in the banking system was in a surplus of 1.96 trln rupees on Thursday, compared with 1.53 trln rupees Wednesday. Advance tax outflows are expected to total 1.00-1.25 trln rupees, dealers said. While most of the outflow took place today, another chunk may move out of the system on Tuesday, they said.

--Primary market

* Godrej Properties, Godrej Agrovet, and Sundaram Home Finance raised funds through CPs.

--Secondary market

* Punjab National Bank's CD maturing on Oct 1 was dealt twice at a weighted average yield of 7.2508%.

* Reliance Industries' CP maturing on Sep 26 was dealt twice at a weighted average yield of 7.1920%.

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

Edited by Ashish Shirke

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