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Informist, Wednesday, Nov. 6, 2024

By Vidhushi RajPurohit

MUMBAI – Issuances of certificates of deposit picked up on account of a big ticket issuance by Small Industries Development Bank of India. The total CD issuances were at INR 33.75 billion, up from INR 29 billion Tuesday. Of the total amount, SIDBI alone mopped up INR 22.75 billion through a one-year paper at 7.58%. The non-banking financial company tapped the market for the second consecutive day, despite having no redemption amount due in November. Tuesday, the non-banking financial company issued a one-year CD at the same level and raised INR 14 billion. 

The remaining INR 11 billion was raised by Punjab National Bank and State Bank of India. State Bank of India, which is not a frequent issuer, borrowed INR 6 billion for a three-month period at 7.10%. The remaining INR 5 billion was raised by Punjab National Bank, also through a three-month paper issued at a rate of 7.15%. For Punjab National Bank, the fundraising was mostly on account of the hefty INR-146-billion repayment it has due for November. So far, this week, the bank has raised INR 32 billion. 

Other banks stayed on the sidelines, citing high surplus liquidity in the banking system. "There is no urgent need for banks to be super active in the CD segment as the systemic liquidity is above INR 2 trillion," a dealer with a state-owned bank said. The liquidity in the banking system was in a surplus of INR 2.84 trillion on Tuesday. 

Issuance of commercial papers slumped. Two companies tapped the market to raise INR 14.25 billion, down from INR 50.55 billion raised on Tuesday. Larsen & Toubro and Reliance Industries issued a three-month paper each at 7.17%. Larsen & Toubro raised INR 9.25 billion and the remaining INR 5 billion was borrowed by Reliance Industries. 

The issuances were easily absorbed by mutual funds and, hence, the rates on CPs and CDs ended flat on Wednesday, dealers said. "The maturing amount for this month is quite low, so mutual funds do not have redemption pressures," a dealer with a brokerage firm said. "So they can easily deploy their funds towards subscribing to the issuances without hiking up the rates."  

The rates on three-month certificates of deposit were at 7.15-7.20%, unchanged from Tuesday. The rates on commercial papers issued by manufacturing companies were also at Tuesday's level of 7.20-7.25%. Papers of similar maturity issued by non-banking financial companies were quoted at 7.45-7.50%, unchanged from Tuesday's close.

--Primary market

* Punjab National Bank, SIDBI and State Bank of India raised funds through CDs.

* Larsen & Toubro and Reliance Industries raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing on Dec. 6 was dealt four times at a weighted average yield of 6.8505%.
* Sikka ports and terminals' CP maturing on Nov. 7 was dealt five times at a weighted average yield of 6.3114%.

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 Akul Nishant Akhoury

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