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Informist, Tuesday, Oct. 29, 2024

By Richard Fargose

MUMBAI - Primary issuances in the short-term debt market rose Tuesday due to demand for funds from non-banking finance companies to meet their credit needs during the festive season, dealers said. "NBFCs were using their bank credit lines till last week, but some of them have started tapping the market," said a dealer with a large state-owned bank.

The issuance of CPs rose to INR 23.85 billion from INR 4.25 billion on Monday. Cholamandalam Investment & Finance Co was the main borrower, raising INR 16 billion from three-month and four-month papers at 7.68% and 7.79%, respectively. Motilal Oswal Financial Services raised INR 2 billion by issuing papers maturing in July at 7.75%.

Dealers said typically the demand for funds rises during the festival season due to high currency circulation and demand for credit. Several dealers with banks said they are witnessing a strong credit pick-up from non-banking finance companies.

However, despite a surge in issuances, rates were unchanged due to strong demand from mutual funds. The rates on three-month certificates of deposit were at 7.15-7.20%, the same level as Friday. 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%.

HDFC Bank was the lone issuer of certificates of deposits on Tuesday. The bank raised INR 10 billion via three-month paper at 7.18%. Dealers said the inflows from the government on account of month-end spending have started, and the liquidity surplus will rise steadily this week. CD issuances have been subdued this month owing to the low redemption amount of INR 649.80 billion, dealers said. 

--Primary market

* Cholamandalam Investment & Finance Co and Motilal Oswal Financial Services raised funds through CP.

* HDFC Bank raised funds through CD.

--Secondary market

* Federal Bank's CD maturing on Monday was dealt at a weighted average yield of 6.9795%.
* Cholamandalam Investment & Finance Co's CP maturing on Wednesday was dealt five times at a weighted average yield of 6.3706%.

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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