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Informist, Wednesday, Oct. 9, 2024

By Richard Fargose and Vidhushi RajPurohit

MUMBAI – The rates of commercial papers and certificates of deposit remained steady, even though the issuances soared, dealers said. "The rates were steady because mutual funds have adequate funds to absorb the issuances," said a dealer with a private bank. "Demand from mutual funds was a bit higher in the short-term segment, also because of the policy rate cut expectations increased after the monetary policy committee's statement."

In the monetary policy announcement, the rate-setting panel kept the policy rates unchanged and, in the lines of market participants' expectations, changed the policy stance to 'neutral' from 'withdrawal of accomodation'. Market players now expect that the RBI may cut interest rates in December. 

Wednesday, the CD issuances totalled INR 126.50 billion against INR 62 billion on the previous day, with the biggest issuer, Punjab National Bank, raising INR 50 billion by issuing a paper which is due for maturity in January at 7.15%. Another INR 50 billion was raised cumulative by Axis Bank and Bank of Baroda, as each borrowed INR 25 billion. Bank of Baroda raised the amount through a three-month paper at 7.11% and Axis Bank issued a one-year paper at 7.50%. HDFC Bank raised the remaining INR 26.5 billion through a one-year paper at 7.50%. 

The rates on the CPs issued by manufacturing companies were at 7.20-7.25%, same as Tuesday. The rates on three-month CDs were also unchanged from the previous day at 7.15-7.20%. Meanwhile, paper of similar maturity issued by non-banking financial companies was quoted at 7.50-7.55%, down 5 basis points from 7.55-7.60% Tuesday.

The issuance of CPs also saw an increase. Wednesday, the total amount raised by companies was INR 14.75 billion, against INR 7.5 billion raised on Tuesday. Aditya Birla Finance was the biggest CP issuer. It raised INR 3.25 billion at 7.75%, with paper maturing in September 2025. Tata Capital Housing Finance raised INR 3 billion at 7.62% from one-year paper. Axis Finance and Tata Capital were the next big issuers and each raised INR 2 billion at 7.80% through a one-year paper. 

Toyota Finance also issued a one-year paper and borrowed INR 2.5 billion at 7.83%. The remaining amount, INR 1.5 billion, was raised by Godrej Industries by a three-month paper at 7.3%.

"There was increased issuances of one-year papers by manufacturing companies because the rates in that segment were slightly attractive for the issuers," a dealer with a mutual fund said. The rates on one-year CPs issued by manufacturing companies were at 7.60-7.65%, against 7.65-7.70% Tuesday.

--Primary market

* HDFC Bank, Axis Bank, Bank of Baroda and Punjab National Bank raised funds through CDs.

* Aditya Birla Finance, Godrej Industries, Axis Financial, Tata Capital, Tata Capital Housing Finance and Toyota Finance raised funds through CPs.

--Secondary market

* Punjab National Bank's CD maturing Oct. 25 was dealt three times at a weighted average yield of 6.9699%.
* Export Import Bank of India's CP maturing Oct. 22 was dealt three times at a weighted average yield of 6.8992%.

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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