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Informist, Tuesday, Nov. 12, 2024

By Vidhushi RajPurohit

MUMBAI - After a hushed start to the week, issuances in the short-term debt market rose on account of rollover demand from banks and companies. The rates, nevertheless, remained in the same range as mutual funds were flush with cash and were able to comfortably absorb the higher supply of paper. 

"Mutual funds are flush with funds as there is low redemption pressure on them, so as and when the issuances happen, they are easily accommodated by the fund houses," a dealer with a brokerage firm said. The rates on commercial papers issued by manufacturing companies were 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%, unchanged from Monday's close. Rates on the certificates of deposit for three-month tenure were also unchanged at 7.15-7.20%. 

Issuances of commercial paper rose to INR 51.75 billion, from a mere INR 5.5 billion on Monday. ICICI Securities was the largest CP issuer Tuesday, raising INR 18 billion by issuing a three-month paper at 7.53%. The company has redemptions of INR 54.55 billion due in November. So far, this month, it has raised INR 25.5 billion.

The other big issuer was Bajaj Finance, which issued a one-year paper at 7.70% to raise INR 16.75 billion. The non-banking lender has issued CPs amounting to INR 4 billion, excluding Tuesday's issuance, in November. Sundaram Finance raised INR 5 billion at 7.67% through a paper maturing in May and Axis Securities raised INR 5 billion through a three-month paper at 7.53%. 

Aditya Birla Finance, which has a redemption of INR 30.40 billion due in November, issued a CP with June maturity at 7.71% to raise INR 3 billion. The company has issued CPs amounting to INR 8.4 billion so far during the month. The remaining INR 4 billion was raised by L&T Finance through a three-month paper at 7.43%.

The issuances of certificates of deposit rose on account of a big ticket issuance from Punjab National Bank. The bank issued a three-month paper at 7.18% to raise INR 25 billion. Among banks, Punjab National Bank has the largest redemptions in November at INR 146 billion. No other bank tapped the CD market on Tuesday.

Market participants said the excess liquidity surplus in the banking system has led to moderation in issuances of CDs in November as it crosses out the need for banks to tap the debt market for short-term funds. "When there are ample funds with the banks, they will not like to borrow from the market, some banks may even choose not to roll over their maturing papers," a dealer with a private bank said. The surplus liquidity in the banking system has persistently remained around INR 2.00 trillion this month. On Monday, the surplus liquidity was at INR 1.99 trillion. 

--Primary market

* Punjab National Bank raised funds through CD.

* Aditya Birla Finance, Sundaram Finance, ICICI Securities, Bajaj Finance, Axis Securities and L&T Finance raised funds through CP.

--Secondary market

* HDFC Bank's CD maturing on Nov. 13 was dealt six times at a weighted average yield of 6.3886%.
* Kotak Securities' CP maturing on Nov. 13 was dealt one time at a weighted average yield of 6.3521%.

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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