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Informist, Monday, Nov. 18, 2024

By Vidhushi RajPurohit

MUMBAI – A large issuance by Reliance Retail Ventures pushed up the volume of commercial paper issuances on Monday, an otherwise muted day. The manufacturing company raised INR 50 billion through a three-month paper at 7.20%, the sole issuance for the day. The company has redemptions worth INR 132.75 billion during November and till Wednesday, it has raised INR 49.50 billion.

Market participants expect the issuances of CPs to steadily increase in the remaining two weeks of the month as more companies will be in need of funds to refinance their maturing papers. The total amount of CP redeeming in Nov. amounts to INR 1.13 trillion. Against this sum, companies have issued paper worth INR 426.26 billion. "The CP issuances have been slacking off when seen in terms of the redeeming amount, but they might pick up during the following weeks as more companies will likely be active to refinance their papers," a fund-manager with a mutual fund said. 

Amidst low issuances, the rates on CPs remained flat. The three-month papers issued by manufacturing companies were quoted 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 the previous day's close.

The certificates of deposit segment saw a sole issuance made by Bank of Baroda, as it raised INR 3.25 billion from a paper maturing in June at 7.40%. The bank has the second-largest redemption amount for Nov. at INR 98.50 billion and the bank has already issued CDs amounting to INR 97.50 billion. 

Market participants said CD issuances this month have been based on banks' need to redeem the maturing papers with a reduced amount of fresh issuances. "When there is comfortable surplus liquidity in the banking system, most banks will not tap the debt market," a dealer with a state-owned bank said. According to data from the Reserve Bank of India's website, the liquidity surplus in the banking system on Sunday was at INR 1.66 trillion. With banks not in the need to tap the market for funds, rates on CDs for three-month tenure have remained unchanged at 7.15-7.20%, dealers said.
 

Amid lack of issuances in the primary market, volumes in the secondary market picked up on Monday. "Mutual funds have funds to deploy as they don't have redemption pressure right now and the muted issuances in the primary market is leading them to increase their trades in the secondary market," a fund manager with a brokerage firm said. The volume of CDs traded in the secondary market was at INR 56.90 billion, up from INR 38.65 billion on Thursday. For CPs, the amount was at INR 54.71 billion, a sharp increase from INR 28.65 billion the previous day. 

--Primary market

* Bank of Baroda raised funds through CD.

* Reliance Retail Ventures raised funds through CP.

--Secondary market

* HDFC Bank's CD maturing on Nov 21 was dealt once at a weighted average yield of 6.7197%.
* ICICI Securities Ltd. CP maturing on Nov. 19 was dealt three times at a weighted average yield of 6.3795%.

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 Avishek Dutta

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