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Informist, Tuesday, Sep 24, 2024

By Vidhushi RajPurohit and Richard Fargose

MUMBAI – Rates on short-term debt instruments such as commercial paper and certificates of deposit were largely unchanged today on account of subdued issuances of such papers, dealers said. Rates on three-month CP issued by non-banking finance companies were quoted at 7.55-7.60%, while those on papers of manufacturing companies were quoted at 7.30-7.35%. Rates on three-month CDs were quoted at 7.25-7.30%.

A few banks tapped the market today to meet the funding requirements, dealers said. Punjab National Bank issued two CDs maturing in one month and three months at 7.20% and 7.25%, respectively. The total amount raised by the bank from the two certificates stood at 10.25 bln rupees. Bank of Maharashtra also raised 5 bln rupees from a CD today, issuing three-month paper at 7.30%.

The largest issuer of CD was Axis Bank, which raised 17 bln rupees at 7.25% by issuing a three-month paper. 

"The CD issuances remained subdued today as most banks met their requirements earlier this month," a dealer with a state-owned bank said. "The CD issuances will likely pick up next month as banks will start tapping the market to refinance their maturing papers."

So far this month, banks have issued CDs amounting to 1.09 trln rupees against the maturity amount of 1.23 trln rupees. "A majority of banks did not have any need to issue any CD today, so they remained on the sidelines," a dealer with a state-owned bank said. "There is demand from mutual funds and the rates are also in acceptable range. As the need for funds will arise, banks will start tapping the CD market again."   

The issuance in the CP market was more muted than CD issuances. L&T Finance was the sole issuer of CP, raising 7.5 bln rupees at 7.58% by issuing a three-month paper.

Overall, CP issuance this month has remained tepid. Against the maturity amount of 2.00 trln rupees, companies have issued only 1.08 trln rupees worth of CP. Of all the companies that had paper maturing this month, National Bank for Agriculture and Rural Development had the largest amount of 256.75 bln rupees. So far, it has issued CP amounting only to 40.75 bln rupees. 

"The primary reason for the fall in CP issuances this month has been the lack of funding demand from NBFCs' side," a fund manager with a mutual fund said.

--Primary market

* Punjab National Bank, Axis Bank and Bank of Maharashtra raised funds through CDs.

* L&T Finance raised funds through CP.

--Secondary market

* Union Bank of India's CD maturing on Sep 25 was dealt seven times at a weighted average yield of 6.7578%

* Adani Ports and Special Economic Zone's CP maturing on Sep 25 was dealt three times at a weighted average yield of 6.7903%

At 1630 IST, the following were the volumes, in billion rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

NOTE: Details of the deals have been received from market sources.

End

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

Edited by Rajeev Pai

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