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Informist, Monday, Oct. 7, 2024

By Vidhushi RajPurohit and Richard Fargose

MUMBAI – The rates in the short-term debt market remained largely steady due to firm demand from mutual funds, dealers said. Banks and companies remained active in the primary short-term debt market, on the same lines as on Friday, after the slowdown observed towards the end of September.

The rates on the CPs issued by manufacturing companies were at 7.25-7.30%, unchanged from Friday. Paper of similar maturity issued by non-banking financial companies was also quoted at the same rate as Friday, which was 7.55-7.60%. The rates on three-month CDs saw a fall of 5 basis points and were quoted at 7.15%-7.20%, from 7.20%-7.25% on the previous day.

On Monday, four companies issued commercial papers and raised a total amount of INR 60.75 billion, up from INR 11.25 billion on Friday. Reliance Retail Ventures was the largest CP issuer, as it raised INR 40 billion at 7.11% by issuing a paper which is due for maturity around Dec. 23. L&T Finance raised INR 15 billion at 7.35% by issuing an intra-month paper. The other two companies were Grasim Industries and Godrej Industries and both issued three-month papers. Grasim Industries raised INR 5 billion at 7.21%, whereas Godrej Industries raised INR 750 million at 7.36%. 

In October, the market expects more companies to tap the CP market because of the upcoming festival fund requirements. However, compared with last month, the amount of CPs due for redemption is low. This month the total amount of CPs due for redemption stands at INR 594.13 billion, against the redemption amount of INR 2.00 trillion for September. "September was the quarter-end period, so there is the redemption amount from CPs issued during the previous quarter-end month," a fund manager with a mutual fund said. 

The redemption amount for CDs is also lower than the previous month. The amount of CDs due for redemption this month is INR 649.80 billion, compared with INR 1.45 trillion in September. Hence, overall, there is less redemption pressure on both banks and companies.  

Issuances of CDs saw an increase as the total amount raised on Monday was INR 50 billion, against INR 30 billion on Friday. Punjab National Bank was again the biggest issuer as it issued a three-month paper at 7.15% and raised INR 20 billion. Indian Bank also issued a three-month paper and raised INR 10 billion at 7.15%. Small Industries Development Bank Of India and Axis Bank both issued a one-year paper. Axis Bank raised INR 5 billion at 7.55% and Small Industries Development Bank Of India raised INR 15 billion at 7.60%.

The volumes in the secondary market were also high as both banks and mutual funds have adequate funds with them, dealers said. The banking system liquidity was at a surplus of INR 2.02 trillion on Sunday. The mutual funds are also free from the redemption pressure which they had towards last month-end period. On Monday, the volume of CP deals in the secondary market stood at INR 38.05 billion, up from INR 15.30 billion on Friday. The volume of CD deals in the secondary market were largely the same as on Friday at INR 60.25 billion, against INR 60.30 billion on the previous day.

--Primary market

* Axis Bank, Small Industries Development Bank Of India, Punjab National Bank and Indian Bank raised funds through CDs.

* L&T Finance, Grasim Industries, Godrej Industries and Reliance Retail Ventures raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing Oct. 24 was dealt five times at a weighted average yield of 6.8300%.
* National Bank for Agriculture and Rural Development's CP maturing Nov. 5 was dealt four times at a weighted average yield of 6.9505%.

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 Akul Nishant Akhoury

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