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Informist, Thursday, Oct. 10, 2024

By Vidhushi RajPurohit

MUMBAI – The rates on short-term debt instruments eased slightly due to adequate surplus liquidity in the banking system and firm demand from mutual funds, dealers said. The rates on three-month certificates of deposit were down 5 basis points to 7.10-7.15% from 7.15-7.20% Wednesday. The rates on commercial paper issued by manufacturing companies were also down 5 bps to 7.15-7.20% from 7.20-7.25% on the previous day. Meanwhile, paper of similar maturity issued by non-banking financial companies was quoted at 7.50-7.55%, unchanged Wednesday.

The liquidity in the banking system was at a surplus of INR 1.29 trillion Wednesday. The systemic liquidity has remained in surplus for the majority of September, except for a few days when it slipped into deficit owing to goods and services tax outflows. Towards the end of September, inflows from the quarter-end spending picked up the liquidity and brought it back to surplus, dealers said. 

The total CD issuances dropped sharply to INR 10 billion from Wednesday's issuances of INR 126.50 billion. Punjab National Bank was the sole issuer of CD. The bank issued a three-month paper at 7.13% and raised INR 10 billion.

"The issuance of CD is based on demand and the prevailing market rates," a dealer with a state-owned bank said. "On Wednesday, there were big-ticket issuances which were easily absorbed by mutual funds and hence the rates remained steady." Market participants expect there to be more CD issuances in the coming weeks as more banks will start tapping the market.

Meanwhile, the amount raised from CP issuances increased to INR 53 billion from INR 14.75 billion on Wednesday. The sharp increase in the CP issuance was largely due to the issuance of a three-month paper of INR 50 billion by National Bank for Agriculture and Rural Development at 7.14%. The remaining amount of INR 3 billion was raised by Tata Projects from a three-month paper at 7.38%.

National Bank for Agriculture and Rural Development was largely on the sidelines in September. It raised only INR 40.75 billion, against INR 256.75 billion due for maturity in September. In October, the company does not have any maturing papers to refinance.  

In October, banks and companies do not have major redemption pressure as the amount of paper due for maturity in October is lower than September's amount. For 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. The amount of CDs due for redemption this month is INR 649.80 billion, compared with INR 1.45 trillion in September.

--Primary market

* Punjab National Bank raised funds through CD.

* National Bank for Agriculture and Rural Development and Tata Projects raised funds through CPs.

--Secondary market

* Indian Bank's CD maturing Nov. 18 was dealt two times at a weighted average yield of 6.9426%.
* National Bank for Agriculture and Rural Development's CP maturing Nov. 5 was dealt one time at a weighted average yield of 6.9000%.

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 Manisha Baxla

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