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Informist, Wednesday, Oct. 16, 2024

By Vidhushi RajPurohit

MUMBAI – No certificates of deposit were issued for the second consecutive day on Wednesday as banks continued to stay on the sidelines. However, the amount raised from commercial papers shot up on account of a big ticket issuance by Hindustan Petroleum Corp Ltd. "The rates are in a comfortable range, but there is a reduced demand from the issuers, which has toned down the overall volume in the primary (short-term debt) market," a fund manager with a mutual fund said. 

After raising INR 22.5 billion on Monday, banks have not tapped the CD market due to low requirements for funds, dealers said. "Liquidity is in surplus and there is no major outflow lined up for banks to aggressively borrow funds," a dealer with a state-owned bank said. On Tuesday, the liquidity surplus in the banking system was INR 1.60 trillion.

"At the start of a new quarter, CD issuances are usually on the lower side, as in the quarter-end period banks had already borrowed significant funds," a dealer with a state-owned bank said. Banks have issued CDs worth INR 459.45 billion so far in October, compared with the total redemption of INR 649.80 billion for the whole month. 

On Wednesday, a total of INR 35 billion was raised through CPs, as against INR 5.25 billion raised on Tuesday. Of the total, INR 30 billion was raised by Hindustan Petroleum Corp at 7.09% through a paper maturing on Dec. 17. SBICap Securities was the other issuer, raising INR 5 billion through a three-month paper at 7.64%.

So far, companies have already raised around 71% of the amount due for maturity in October. Companies have issued CPs totalling INR 443.65 billion compared with INR 624.43 billion due for redemption in October.

Market participants expect the CP issuances to increase in November-December as companies will likely tap the market to meet the funding requirements in the festive months. Issuances in the CP market are also expected to increase as companies will need funds to refinance their maturing papers for the Oct-Dec quarter. As of now, the amount due for redemption for the quarter ending December stands at INR 3.03 trillion.   

The rates on three-month papers issued by non-banking financial companies were quoted at 7.45-7.50% on Wednesday, unchanged from the previous day. The rates on papers of similar maturity issued by manufacturing companies rose 5 basis points to 7.20-7.25%. The rates on two-month papers issued by manufacturing companies fell 5 bps to 7.05-7.10%.

--Primary market

* SBICap Securities and Hindustan Petroleum Corp raised funds through CPs.

--Secondary market

* Union Bank of India's CD maturing Dec. 10 was dealt two times at a weighted average yield of 7.0198%.
* Bajaj Finance's CP maturing Oct. 17 was dealt three times at a weighted average yield of 6.3521%.

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 Saji George Titus

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