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Informist, Tuesday, Oct. 15, 2024

By Richard Fargose and Vidhushi RajPurohit

MUMBAI – Issuances in the short-term debt market fell sharply Tuesday as the amount raised though commercial papers declined and there were no issuances of certificates of deposit, dealers said. The reason for the muted volume in the primary market is the high amount raised in the previous month, market participants said. "October is the start of a new quarter, and low activity is usual for the month," a dealer with a mutual fund said.

Only three companies tapped the CP market and raised a cumulative INR 5.25 billion, down from INR 8 billion raised Monday. Godrej Consumer Products was the biggest issuer, as it raised INR 3.5 billion at 7.20% from a three-month paper. The next big issuer was APL Apollo Tubes as it raised INR 1 billion at 7.30% from a CP maturing on Dec. 27. The remaining INR 750 million was raised by Godrej Industries through a three-month CP at 7.30%. 

The rates on three-month CPs were the same as on Monday. Three-month papers issued by manufacturing companies quoted at 7.15-7.20%. Papers of similar maturity issued by non-banking financial companies were quoted at 7.45-7.50%, unchanged from Monday. "Low issuances meant that there was no negotiation in the market and the rates were thus same as on the previous day," a dealer with a brokerage firm said. 

The issuance of CDs was completely muted as no bank tapped the market. On Monday, two banks had raised a total of INR 22.5 billion. Market participants said banks have high surplus liquidity and most had actively borrowed funds in September to meet their quarter-end funding needs.

Dealers said the issuance of CDs will pick up in the coming weeks as more banks will start tapping the market to meet their funding needs. "Today (Tuesday), most banks did not have any major need to issue CD as they have comfortable funds, but when the need arises to refinance the maturing papers, more CD issuances will be there," a dealer with a private bank said.

--Primary market

* Godrej Consumer Products, APL Apollo Tubes, and Godrej Industries raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing Nov. 21 was dealt three times at a weighted average yield of 6.9284%.
* Cholamandalam Investment and Finance Co.'s CP maturing Oct. 30 was dealt one time at a weighted average yield of 7.3195%.

At 1700 IST, the following were the volumes, in INR billion, 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 Ashish Shirke

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