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Informist, Tuesday, Nov. 5, 2024

By Vidhushi RajPurohit

MUMBAI – Rates on commercial papers and certificates of deposit ended flat on Tuesday despite a rise in issuances as high demand from mutual funds kept a lid on rates, dealers said. The rates on three-month certificates of deposit were at 7.15-7.20%, unchanged from Friday. The rates on commercial papers issued by manufacturing companies were also at Monday's level of 7.20-7.25%. Papers of similar maturity issued by non-banking financial companies were quoted at 7.45-7.50%, same as Monday's close.

The issuances of CPs picked up as more companies flocked to the short-term debt market to meet working capital requirements for the busy season, dealers said. "It is usual for companies to tap the market in Nov-Dec, as there is greater demand for funds towards year-end," a dealer with a mutual fund said. "For others, there is a pressure to rollover the maturing papers, so overall both the reasons can lead to greater issuances." Tuesday, eight companies raised a total of INR 50.55 billion, against INR 13.5 billion raised Monday. Reliance Industries was the largest issuer as it tapped the market to raise INR 25 billion by issuing a three-month paper at 7.17%. The company does not have any maturity due in November.

The other big issuance in CP was by Can Fin Homes, which raised INR 10 billion through a three-month paper at 7.26%, against its November redemption amount of INR 15 billion. Another INR 5 billion was raised cumulatively by Godrej Housing Finance and Motilal Oswal Financial Services as each raised INR 2.5 billion by issuing three-month papers. Godrej Housing Finance raised the amount at 7.28%, whereas Motilal Oswal Financial Services shelled out 7.83%.

ICICI Securities and HDFC Securities also issued three-month papers each and raised a total amount of INR 6.5 billion. HDFC Securities raised INR 3.5 billion at 7.55% and ICICI Securities raised INR 3 billion at 7.53%.

Redington India refinanced its maturing paper worth INR 2 billion by raising the full amount through an intra-month CP at 7.1%. Another INR 2.05 billion was raised by Tata Capital, as it issued a one-year CP at 7.76%. The company has to repay short-term debt worth INR 13 billion this month.

The total amount raised through CDs fell to INR 29 billion from INR 49 billion Monday as liquidity surplus in the banking system widened. Small Industries Development Bank of India and Punjab National Bank were the only two issuers of CDs. Small Industries Development Bank of India raised INR 14 billion from a one-year paper at 7.58%. Punjab National Bank, which has the largest maturing amount in November at INR 146 billion, raised INR 15 billion from a three-month paper at 7.16%. Monday also the bank had tapped the market and raised INR 12 billion by issuing a three-month paper at 7.17%.

"Banks have a high surplus liquidity for now, so that is keeping most banks away from issuing CDs aggressively, but more banks will tap the market as and when their individual need arises," a dealer with a state-owned bank said. The liquidity surplus in the banking system was INR 2.76 trillion Monday.

--Primary market

* Punjab National Bank and SIDBI raised funds through CDs.

* ICICI Securities, HDFC Securities, Redington India, Tata Capital, Reliance Industries, HDFC Securities and Can Fin Homes raised funds through CP.

--Secondary market

* Punjab National Bank's CD maturing on Dec. 3 was dealt three times at a weighted average yield of 6.8915%.
* The Tata Power Co.'s CP maturing on Nov. 6 was dealt two times at a weighted average yield of 6.2061%.

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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