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Informist, Monday, Sep 23, 2024

By Richard Fargose

MUMBAI – Rates on commercial papers and certificates of deposits eased slightly today due to lower issuances amid strong demand from mutual funds, dealers said.

Rates on three-month CPs issued by non-banking finance companies eased to 7.55-7.60% from 7.65-7.70% on Friday, while rates on similar-maturity papers issued by manufacturing companies fell 5 basis points to 7.30-7.35%. Rates on CDs maturing in three months inched lower to 7.25-7.30% today from 7.30-7.35% in the previous session.

"Today, issuances were down, and mutual funds' demand was strong," said a fund manager with a mid-sized mutual fund. "After GST (goods and service tax) outflows, MFs have more clarity on liquidity conditions." 

So far today, CPs worth 15.00 bln rupees were issued, compared with 37.35 bln rupees issued on Friday and 68.00 bln rupees on Thursday. No bank raised funds through CDs today.

The Reserve Bank of India's September bulletin said CP issuances in Apr-Aug increased to 6.28 trln rupees from 5.88 trln rupees in the corresponding period of the previous year. With the central bank increasing risk weights on bank loans to non-banking finance companies, CP issuances by NBFCs increased as they diversified their funding sources beyond banks, the RBI said.

The average risk premium in the money market, which is spread between 3-month CP and 91-day T-bill rates, was at 107 bps during the period Aug 16–Sep 17, 3 bps higher than during Jul 16-Aug 15, the RBI said.

The RBI data showed that CD issuances grew by more than 65% on year to 4.51 trln rupees during Apr 1-Sep 6 to meet funding requirements of banks to bridge the gap between credit and deposit growth.

Bank loans grew 13.3% on year as of Sep 6, compared with deposit growth of 11.1% during the same period.

--Primary market

* Kotak Securities, ICICI Securities, L&T Finance, and Birla Group Holdings raised funds through CPs.

* No bank raised funds via CDs.

--Secondary market

* Small Industries Development Bank of India's CD maturing on Dec 18 was dealt five times at a weighted average yield of 7.2499%.

* PNB Housing Finance’s CP maturing on Tuesday was dealt twice at a weighted average yield of 6.7903%.

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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