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Informist, Wednesday, Nov. 6, 2024

By Vidhushi RajPurohit

MUMBAI – Issuances of commercial papers picked up from Wednesday's quantum. Four companies tapped the market to raise INR 22.5 billion, against INR 14.25 billion borrowed the previous day. Reliance Retail Ventures was the largest CP issuer, raising INR 13 billion at 7.20% from a three-month paper. Aditya Birla Finance also issued a three-month paper at 7.48% and borrowed INR 7.0 billion. Godrej Industries raised INR 1.50 billion at 7.26% from a three-month paper. The rest of INR 1.00 billion was raised by Aditya Birla Money, also from a three-month paper at 7.69%.

Despite high issuances, the rates on CPs stayed flat. "The issuances in the past few days have been on an infrequent basis which are easily subscribed by the investors so the rates remained at the same level," a fixed income dealer at a brokerage said. The rates on CPs 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. 

The rates on the certificates of deposit for three-month tenure were also unchanged, at 7.15-7.20%, even as the total issuances rose to INR 46 billion, from INR 33.75 billion on Wednesday. The increase in the CD issuances was due to the big ticket borrowing by Indian Bank and Export Import Bank of India. Other banks remained on the sidelines as market participants cited the prevailing high surplus liquidity in the banking system as the reason. "There are ample funds with the banks right now and the month has also just begun, as and when banks will need to redeem the maturing papers, they will be more active," a dealer with a private bank said. The surplus liquidity in the banking system was at INR 2.77 trillion on Wednesday, the Reserve Bank of India data showed. 

Export Import Bank of India was the largest CD issuer for the day, borrowing INR 25 billion from a one-year paper at 7.51%. Indian Bank raised the remaining INR 21 billion through a paper maturing in May at 7.42%. For November, the bank has a total redemption amount of INR 35 billion, of which INR 5.75 billion is due to mature on Wednesday. 

The volumes in the secondary market picked up as both banks and mutual funds have adequate funds, dealers said. "Banks and mutual funds are actively participating in the secondary market as there are not enough issuances to invest in the primary market," a fund manager with a mutual fund said. The volume of CDs traded in the secondary market rose to INR 54.25 billion from INR 46.80 billion the previous day. CP volumes increased to INR 47.03 billion from INR 28.60 billion.

--Primary market

* Indian Bank and Export Import Bank of India raised funds through CDs.

* Godrej Industries, Aditya Birla Money, Aditya Birla Finance and Reliance Industries raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing on Feb. 3 was dealt three times at a weighted average yield of 7.1638%.
* Export Import Bank of India's CP maturing on Dec. 6 was dealt nine times at a weighted average yield of 6.9500%.

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 Tanima Banerjee

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