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Informist, Wednesday, Oct. 23, 2024

By Vidhushi RajPurohit 

MUMBAI – Issuance in the short-term debt market picked up as companies flocked to issue commercial paper to refinance their maturing paper for October. For certificates of deposit, the amount was high on account of a big-ticket issuance by Punjab & Sind Bank. Despite the increased issuances, the rates on short-term debt paper remained at the same level. "Demand from mutual funds was high, so the issuances were easily subscribed without any spike in rates," a fund manager with a mutual fund said. 

The rates on three-month CDs were at the same level as on Tuesday--7.15-7.20%. The rates on three-month paper issued by non-banking finance companies were quoted at 7.45-7.50% Wednesday, unchanged from the previous day. The rates on paper of similar maturity issued by manufacturing companies were also unchanged at 7.20-7.25%.

On Wednesday, total CP issued came to INR 38 billion, against INR 22.75 billion raised Tuesday. The CP issuances were driven by companies' need to refinance maturing paper. All the entities that tapped the CP market have redemption amounts due in October. NTPC Ltd. was the largest issuer and tapped the market to refinance its CP which is due for redemption Friday. It raised INR 20 billion at 7.20% from a three-month paper, against the maturity amount of INR 31 billion.

ICICI Securities Ltd. also issued a three-month paper to raise INR 5 billion at 7.60%, against the total maturity amount of INR 8.25 billion. So far in October, it has already issued CP totalling INR 3 billion. Aditya Birla Money Ltd. raised INR 1 billion at 7.82% from a three-month paper, refinancing in full the redemption amount of INR 1 billion for October. 

The other two issuers were Poonawalla Fincorp Ltd. and Kotak Securities, which also issued three-month CP and raised INR 6 billion each. Poonawalla Fincorp raised the amount at 7.66%. For Kotak Securities, the rate of issuance was 7.62%.

The total amount raised through CDs was INR 15 billion, against nil Tuesday. Punjab & Sind Bank was the sole issuer of CDs, and raised the entire amount at 7.29% by issuing a three-month paper. Most banks cited low requirements as the reason for muted participation in the CD market. "There is a short-term need for funds after Monday's (goods and services) tax outflows, but the impact of that is visible in the high money market rates," a dealer with a state-owned bank said. The weighted average call money rate was at the Reserve Bank of India's marginal standing facility rate of 6.75%. The liquidity surplus on Tuesday was at INR 737.75 billion. The surplus amount on Sunday, before the tax outflows, was at INR 1.52 trillion, according to RBI data. 

--Primary market

* Punjab & Sind Bank raised funds through CD.

* NTPC, ICICI Securities, Kotak Securities, Poonawalla Fincorp, and Aditya Birla Money raised funds through CP.

--Secondary market

* HDFC Bank's CD maturing Oct. 24 was dealt nine times at a weighted average yield of 6.7476%.
* PNB Housing Finance's CP maturing Oct. 24 was dealt five times at a weighted average yield of 6.7605%.

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 Rajeev Pai

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