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Informist, Friday, Nov. 8, 2024

By Vidhushi RajPurohit

MUMBAI – The rates on short-term debt instruments remained flat on account of subdued activity in the market. The issuances in the market slumped Friday, with only two issuances reported during the day. The rates on commercial papers issued by manufacturing companies were at Thursday'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 Thursday's close. The rates on the certificates of deposit for three-month tenure were also unchanged, at 7.15-7.20%. 

The issuance of CPs fell sharply to INR 500 million from Thursday's INR 22.5 billion. ICICI Securities was the sole issuer of CPs. The company raised the entire quantum from a three-month paper at 7.50%. For November, the company has a maturity amount of INR 54.55 billion. "The activity in the primary market fell today, but during the rest of the month the issuances will pick up as more companies will tap the market as and when the redemption requirement arises," a fund manager with a mutual fund said. No other companies issued CPs.  

The total issuance of CDs also saw a sharp fall to INR 10 billion, from INR 46 billion on Thursday. IDFC FIRST Bank was the sole issuer, through one-year paper at 7.65% yield. The bank has two maturities worth INR 10 billion later this month, and may be pre-emptively rolling them over, dealers said.

High surplus liquidity in the banking system and low redemption amount for November has kept most banks on the sidelines in the certificates of deposit market, dealers said. On Thursday, the surplus liquidity in the banking system was INR 2.45 trillion. This week, surplus liquidity in the banking system consistently remained above INR 2.50 trillion due to month-end spending by the government and large redemption of gilts. Around INR 1 trillion was the amount of inflows from the salary and pension payments and INR 774.13 billion worth of the 6.18%, 2024 gilt turned up for redemption on Tuesday, data from the RBI showed. 

"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 at a state-owned bank said. "The issuance of CDs is also based on banks' funding needs and the demand for funds is up when there is a need to refinance the maturing papers." CDs worth INR 629.45 billion are maturing in November, about INR 20 billion less than October.

--Primary market

* IDFC Bank raised funds through CD.

* ICICI Securities raised funds through CP.

--Secondary market

* Punjab National Bank's CD maturing on Nov. 27 was dealt three times at a weighted average yield of 6.8506%.
* Reliance Retail Ventures' CP maturing on Nov. 12 was dealt eight times at a weighted average yield of 6.9494%.

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

Edited by Deepshikha Bhardwaj

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