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Informist, Wednesday, Sep 25, 2024

By Vidhushi RajPurohit and Richard Fargose

MUMBAI – Despite a rise in primary issuances of certificates of deposits, rates on such instruments eased slightly today due to firm demand from mutual funds, dealers said. "Though the amount of issuances of CD picked up from the day before, the number of banks tapping the market is still not substantial as most banks met their funding requirements early in the month as they rushed to refinance their maturing deposit papers," a dealer with a state-owned bank said. "The market will likely see more CD issuances in the next week as the festive season will approach from the onset of October."

Rates on three-month CDs were quoted at 7.23-7.28%, against 7.25-7.30% previously, while two-month CD rates also eased 5 basis points to 7.20-7.25%.

The issuance in the overall short-term market picked up from Tuesday as more banks and companies tapped the market. Today, banks issued CDs amounting to 68 bln rupees, up from 32.3 bln rupees on Tuesday.

HDFC Bank was the largest issuer today, as it raised 43 bln rupees from a one-month paper and a one-year paper at the rate of 7.15% and 7.65%, respectively. Bank of Baroda and Canara Bank also tapped the market as they raised 10 bln rupees at 7.24% and 5 bln rupees at 7.25%, respectively, from three-month CDs. Jammu and Kashmir Bank, which is not a frequent issuer, also borrowed 3 bln rupees through a three-month CD at the rate of 7.43%.

The number of companies issuing commercial papers also increased as compared to Tuesday. During the day, three companies issued CPs totaling 8 bln rupees, slightly higher than 7.5 bln rupees raised the day before by L&T Finance, the sole issuer. 

Tata Power Renewable Energy was the largest CP issuer today, as it raised 4 bln rupees from a three-month paper at 7.41%. Network 18 Media and Investments and L&T Finance each issued three-month papers and raised 1.5 bln rupees at the rate of 7.33% and 2.5 bln rupees at the rate of 7.58%, respectively.  

Meanwhile, rates on CPs were unchanged as companies today stayed on the sidelines of the short-term market. Rates on three-month CPs issued by non-banking finance companies were quoted at 7.55-7.60%, while those on papers from manufacturing companies were quoted at 7.30-7.35%.

"As the month's end is approaching, companies do not have any urgent need to aggressively borrow through CPs as most of them have borrowed funds from different avenues to meet their funding requirements," a dealer with a mutual fund said. "Mutual funds have adequate funds with them to absorb the issuances as they arrive, most likely next month the short-term debt market will be more actively engaged in raising funds against the maturing papers."

--Primary market

* Canara Bank, Jammu and Kashmir, Bank and Bank of Baroda and HDFC Bank raised funds through CDs.

* L&T Finance, Network 18 Media and Investments and Tata Power Renewable Energy raised funds through CP.

--Secondary market

* Export and Import Bank of India's CD maturing on Mar 24 was dealt at a weighted average yield of 7.4501%

* Tata Steel's CP maturing on Sep 26 was dealt three times at a weighted average yield of 6.7172%

At 1630 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:

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 Aditya Sakorkar

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