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Informist, Thursday, Sep 26, 2024

By Richard Fargose and Vidhushi RajPurohit

MUMBAI – The rates on commercial papers and certificates of deposits remained steady as some corporates and banks raised funds amid firm demand from mutual funds, dealers said.

Towards quarter-end, the short-term debt issuances usually subside, but due to excess funds with mutual funds, the market saw activity, dealers said. "Companies and banks have stayed on the sidelines this week, meanwhile, mutual funds had excess funds to deploy and were actively seeking debt instruments to deploy their funds," a dealer with a state-owned bank said.

The issuance of CPs jumped to 29.5 bln rupees from 8 bln rupees raised on Wednesday. The Export and Import Bank of India was the largest issuer, raising 23 bln rupees from one-month paper at 7.24%. Bajaj Financial Securities and ICICI Securities raised 1.5 bln rupees at 7.68% from an eight-month paper and 4 bln rupees at 7.62% from a three-month paper, respectively. Godrej Industries and Aditya Birla Money also issued three-month papers as they raised 750 mln rupees at 7.48% and 250 mln rupees at 7.83%, respectively.

Rates on CPs were unchanged from Tuesday. CPs issued by non-banking financial companies with three months maturity were at 7.55-7.60%, while papers of similar maturity for manufacturing companies were at 7.30-7.35%. 

According to a report from India Ratings, the issuance of CPs and CDs is expected to remain in a higher range as more banks and companies will tap the debt market to meet their funding requirements.  

Two banks raised 30.50 bln rupees today against 68 bln rupees raised on Tuesday. State Bank of India was the largest issuer of CDs as it raised 26.75 bln rupees at 7.18% from a three-month paper. HDFC Bank issued a one-year paper and raised 3.75 bln rupees at 7.65%. 

Issuance of CD by State Bank of India is not a usual occurrence in the market. "SBI did not have any need for funds, it issued CD today owing to demand from mutual funds," a dealer with the state-owned bank said. "The demand from the mutual fund and attractive rates led the bank to issue the paper at 6 bps lower than its previous issuance." On Sep 10, the bank issued a three-month CD and raised 100 bln rupees at 7.24%. 

Rates on three-month CDs were quoted at 7.25-7.30%, slightly up from 7.23-7.28% on Wednesday.

--Primary market

* State Bank of India and HDFC Bank raised funds through CDs.

* Export and Import Bank of India, ICICI Securities, Bajaj Financial Securities, Godrej Industries and Aditya Birla Money raised funds through CPs.

--Secondary market

* Kotak Mahindra Bank's CD maturing on Sep 27 was dealt seven times at a weighted average yield of 6.5241%

* Indian Oil Corporation's CP maturing on Sep 27 was dealt four times at a weighted average yield of 6.5006%

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 Tanima Banerjee

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