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Informist, Friday, Sep 20, 2024

By Richard Fargose and Vidhushi RajPurohit

MUMBAI – Fundraising through certificates of deposit was subdued today as banks met the majority of their funding requirements on Thursday, dealers said. Banks issued CDs worth 8 bln rupees today compared with 81 bln rupees on Thursday. 

"Banks remained on the sidelines today, as most of their funding requirements were met yesterday (Thursday) as they participated actively in the debt market amid deficit liquidity," a dealer at a state-owned bank said. "Today the liquidity conditions were better and soon the government's month-end spending will boost it further." 

After slipping into a deficit of 26.26 bln rupees on Wednesday owing to the advance tax outflows, the liquidity was back in surplus of 248.25 bln rupees on Thursday, Reserve Bank of India data showed. Likely inflows from government spending improved the liquidity, a dealer at a private bank said. 

Punjab National Bank was the sole CD issuer today, raising 8 bln rupees through papers maturing in three months and one month at coupons of 7.25% and 7.19%, respectively, dealers said. 

Rates on CDs maturing in three months were steady at 7.30-7.35% today.

Funds raised through commercial paper remained elevated today as companies tapped the market to borrow funds ahead of the festival season, dealers said. Manufacturing companies and non-banking financial institutions raised 37.35 bln rupees through CPs today, compared with 68 bln rupees on Thursday. 

Export and Import Bank of India was the largest issuer of CP today, borrowing 25 bln rupees through three-month CP at 7.25%. Godrej Properties, Hero Housing Finance, Aditya Birla Finance, Astec Lifescience, Kotak Securities and Tata Projects were the other issuers.

"CP issuances might remain in a high range as more companies will likely tap the market to gather sufficient funds to prepare for the forthcoming festive months," a dealer with a brokerage firm said. "Mutual funds are also seen actively investing in these papers as rates picked up slightly in the primary market." 

Rates on three-month CPs issued by non-banking finance companies were at 7.65-7.70%, slightly up from 7.60-7.65% on Thursday, and rates on CPs of similar maturity issued by manufacturing companies were at 7.35-7.40%, against 7.25-7.30% on Thursday. 

--Primary market

* Export and Import Bank of India, Godrej Properties, Hero Housing Finance, Aditya Birla Finance, Astec Lifescience, Kotak Securities and Tata Projects raised funds through CPs.

* Punjab National Bank raised funds via CDs today.

--Secondary market

* Union Bank of India's CD maturing Sep 23 was dealt four times at a weighted average yield of 6.7401%.

* Reliance Retail Venture's CP maturing on Sep 23 was dealt six times at a weighted average yield of 6.7201%.

At 1700 IST, the 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

Edited by Saji George Titus

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