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Informist, Friday, Oct. 4, 2024

By Vidhushi RajPurohit and Richard Fargose

MUMBAI – The number of issuers that tapped the short-term market rose on Friday, after being subdued since the start of the new quarter. Market participants expect issuances of commercial paper and certificates of deposit to rise further as the redemption due for October will come near.

Issuances of CDs saw an increase as the total amount raised on Friday was INR 30 billion, as against INR 10 billion raised on Thursday. Punjab National Bank was the biggest issuer as it issued a one-month paper at 7.00% and raised INR 20 billion. Punjab and Sind Bank was the other big issuer as it raised INR 10 billion from a three-month CD at 7.29%. Rates on three-month CDs were quoted at 7.20-7.25%, the same as on Thursday.

"Issuance of CDs will pick up gradually this month as for now banks have ample funds, and they also raised CDs aggressively in September to meet the quarter-end requirements," a dealer with a state-owned bank said. The total issuances of CDs in September was at INR 1.45 trillion, up 76.74% on month from INR 820.20 billion. The liquidity surplus in the banking system swelled to a 22-month-high on Thursday due to inflows from the government's month-end spending.

Four companies issued CPs and raised INR 11.25 billion, against one company raising INR 35 billion on Thursday. Amongst CP issuers, L&T Finance was the biggest issuer, raising INR 7.00 billion at 7.35% by issuing an intra-month paper. Birla Group Holdings issued a CP with maturity in June at 8.13% and ICICI Securities raised fund at 7.86% from a one-year paper. Godrej Industries also tapped the CP market as it issued a three-month paper and raised INR 750 million at 7.35%.

However, the rates on commercial paper and certificates of deposit largely remained steady due to firm demand from mutual funds, dealers said.

The rates on the CP issued by manufacturing companies were at 7.25-7.30%, unchanged from Thursday. Meanwhile, paper of similar maturity issued by non-banking financial companies fell 5 basis points to 7.55-7.60%, from 7.60-7.65% as quoted on Thursday.

--Primary market

* Punjab and Sind Bank and Punjab National Bank raised funds through CDs.

* L&T Finance, Birla Group Holdings, ICICI Securities and Godrej Industries raised funds through CP.

--Secondary market

* Punjab National Bank's CD maturing Oct. 29 was dealt one time at a weighted average yield of 6.8502%.
* National Bank for Agriculture and Rural Development's CP maturing Nov. 8 was dealt three times at a weighted average yield of 6.9899%.

At 1700 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 Vidhi Verma

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