More Stories

Informist, Tuesday, Oct. 8, 2024

By Richard Fargose and Vidhushi RajPurohit

MUMBAI – The issuances in the short-term debt market have started to pick up as more banks are tapping the market to raise funds, while the rates remained largely steady due to firm demand from mutual funds, dealers said. 

"The subdued issuance in the early part of the week was due to the active participation seen during September," a dealer with a state-owned bank said. Mutual funds, which are the major investors, are not facing redemption pressures that existed during the month-end and have ample funds to absorb the issuances as they arise, dealers said.

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

Tuesday, the CD issuances totalled INR 62 billion, with the biggest issuer, Punjab National Bank, raising INR 42 billion by issuing a paper which is due for maturity in January at 7.15%. The two other big issuers were IDBI Bank and Small Industries Development Bank Of India, as each raised INR 10 billion. IDBI bank borrowed the amount at 7.24% with a CD maturing in January. Meanwhile, Small Industries Development Bank of India issued a one-year paper at 7.60%.

Both Punjab National Bank and Small Industries Development Bank Of India raised funds on Monday as well through CDs. Market expects a rise in CD issuances in the coming weeks because more banks will tap the market to refinance their maturing papers. "In October, the maturity amount for both banks and companies is less than that of September, but since the upcoming months are festive time, there might be active CP and CD issuances," a dealer with a mutual fund said.  

In October, 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. Meanwhile, for CDs the amount stands at INR 649.80 billion, against INR 1.45 trillion for September. 
 

On Tuesday, four companies issued commercial papers and raised a total amount of INR 7.5 billion. Tata Capital was the largest CP issuer, as it raised INR 3.00 billion at 7.55% by issuing a three-month paper. L&T Finance raised INR 1.00 billion at 7.35% by issuing an intra-month paper. The other two companies were ICICI Securities and Bajaj Financial Securities and both issued three-month papers. Bajaj Financial Securities raised INR 1.50 billion at 7.61%, whereas ICICI Securities raised INR 2.00 billion at 7.57%. 

"The issuances from companies are still fewer as they are not burdened with redemption pressures," an official with a non-banking financial company said. "But, the issuances will pick up as more companies will have more demand as they will be required to finance their festive requirements."  

--Primary market

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

* ICICI Securities, Bajaj Financial Securities, Tata Capital and L&T Finance raised funds through CPs.

--Secondary market

* Axis Bank's CD maturing Dec. 26 was dealt three times at a weighted average yield of 7.0590%.
* PNB Housing Finance's CP maturing Oct. 24 was dealt three times at a weighted average yield of 7.0503%.

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 Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.