More Stories

Informist, Tuesday, Sep 17, 2024

By Siddhi Chauhan

MUMBAI – After a dull day in the short-term debt market on Monday, issuances of commercial papers and certificates of deposit rose today as issuers tapped the short-term debt market to finance rollovers, dealers said.

Today, manufacturing companies and non-banking financial institutions raised 27.75 bln rupees through CPs against 12 bln rupees on Monday, while banks mopped up 46 bln rupees through CDs against nil on the previous day. 

Tata Capital was the largest issuer of CP today, raising 10 bln rupees through papers maturing in three months at a rate of 7.67%. Axis Securities raised 7 bln rupees via papers maturing in three months at 7.79%. 

Even though CP issuances rose from the previous day, they were still lower than the average daily CP issuances in the last week, which was 33.25 bln rupees. "If we compare CP issuances from yesterday (Monday), surely they have risen, but otherwise the borrowing was quite normal," a dealer at mid-sized brokerage firm said. "Had it not been for redemption pressures that mutual funds are facing, the issuances would have been more." 

The redemption pressures led mutual funds to sell papers maturing this month in the secondary market, dealers said. 

Issuances through CDs rose on the back of a sharp fall in liquidity surplus, dealers said. Liquidity surplus in the banking system narrowed to 221.53 bln rupees on Monday from 1.35 trln rupees on Sunday, according to data from the Reserve Bank of India. The liquidity surplus in the banking system on Monday was the lowest since Jun 27. The sharp decline in surplus was due to outflows of around 1.25 trln rupees for advance tax, dealers said.

Today, Bank of Baroda alone raised 25 bln rupees through CD maturing in three months at 7.26%. Punjab and Sind Bank raised 15 bln rupees through two CDs maturing in three months and six months at 7.35% and 7.60%, respectively. 

The rates on short-term debt instruments remained flat today, with three-month CPs issued by non-banking finance companies quoted at 7.60-7.80%. Rates on similar papers issued by manufacturing companies were flat at 7.25-7.45%. The rates on certificates of deposit maturing in three months were at 7.25-7.35%.
 

Borrowing through the CDs is expected to rise next week as outflows for goods and services tax are scheduled to begin later this week, dealers said. 

--Primary market

* Tata Capital, Axis Securities, Redington India, Godrej Consumer Products, Godrej Industries, Godrej Properties, Bajaj Finance Securities and Julius Baer Capital raised funds through CPs.
* HDFC Bank, Punjab and Sind, and Bank of Baroda raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing on Thursday was dealt six at a weighted average yield of 6.7573%.

* National Bank for Agriculture and Rural Development's CP maturing on Thursday was dealt once at a weighted average yield of 6.7550%.

At 1700 IST, 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

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

Edited by Saji George Titus

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.