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Informist, Thursday, Oct. 24, 2024

By Vidhushi RajPurohit

MUMBAI – The rates on short-term debt instruments remained steady Thursday as issuances remained low, dealers said. The rates on three-month certificates of deposit were at 7.15-7.20%, the same level as on Wednesday. The rates on three-month commercial papers issued by non-banking finance companies were 7.45-7.50%, unchanged from the previous day. The rates on CPs of similar maturity issued by manufacturing companies were also unchanged at 7.20-7.25%.

Bank of Baroda was the sole issuer of CDs. The state-owned bank raised INR 4 billion by issuing a paper maturing on May 15 at 7.40%. On Wednesday, the total CD issuances were INR 15 billion. Bank of Baroda has been a frequent issuer this month owing to the high redemption amount of INR 114.50 billion for the month. So far, the bank has raised a total of INR 53 billion, including that raised Thursday.

"The issuance of CDs for this month (October) has been based on the banks' need to refinance their maturing papers," a dealer with a state-owned bank said. "Since the redemption amount is not that much, CD issuances have also not been that high." So far, the total issuance of CDs this month has been INR 529.95 billion, against the total maturity of INR 649.80 billion. 

The issuance of CPs was also lower than that on Wednesday. The total amount raised by issuing CPs was INR 17 billion, against Wednesday's INR 38 billion. The amount was cumulatively raised by two companies -- Tata Motors Finance and HDB Financial Services. Tata Motors Finance was the largest issuer as it issued a three-month paper and raised INR 13 billion at 7.60%. The remaining INR 4 billion was raised by HDB Finance by issuing a paper maturing in December at 7.40%.

Both the companies that tapped the CP market had rollover demand to refinance their CPs which are due for maturity in October. Tata Motors Finance has three upcoming maturities this month totalling INR 14 billion. In the case of HDB Financial, the redemption amount is INR 7.25 billion. 

CP issuances so far in October have already exceeded the redemption amount by 31%. The total CPs issued so far is INR 836.71 billion, against maturity amount of INR 635.19 billion. Market participants expect issuances to pick up further in Nov-Dec. "Companies will be more active in issuing debt papers as they will demand funds for the festive season and, additionally, it is a usual occurrence for borrowing to pick up towards year-end," a fund manager with a mutual fund said. 

--Primary market

* Bank of Baroda raised funds through CDs.

* Tata Motors Finance and HDB Financial Services raised funds through CPs.

--Secondary market

* Punjab National Bank's CD maturing Oct. 25 was dealt eight times at a weighted average yield of 6.7017%.
* NTPC's CP maturing Oct. 25 was dealt six times at a weighted average yield of 6.7206%.

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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