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Informist, Thursday, Nov. 21, 2024

By Vidhushi RajPurohit

MUMBAI – Issuances in the short-term debt market picked up on account of both repayment needs and also on fresh demand for funds, dealers said. However, strong demand from the mutual funds ensured that there were ready buyers, preventing any spike in rates. The three-month commercial papers issued by manufacturing companies were quoted at the same level as Tuesday's 7.18-7.23%. Papers of similar maturity issued by non-banking financial companies were at 7.40-7.45%, unchanged from the previous day's close. For certificates of deposit, the rates also remain unchanged at 7.15-7.20%. 

The total amount of CP issuances rose to INR 68.3 billion, from INR 21.5 billion on Tuesday. National Bank for Agriculture and Rural Development and NTPC Ltd. were the two biggest issuers for the day, raising a cumulative sum of INR 61.05 billion by issuing a three-month paper each. National Bank for Agriculture and Rural Development raised INR 31.05 billion at 7.20%, while NTPC borrowed a sum of INR 30 billion at 7.18%.

For the National Bank for Agriculture and Rural Development, Thursday's issuance was likely to redeem its maturing papers for November. The non-banking institution has a total redemption figure of INR 52 billion and so far it has issued CP amounting to INR 32.25 billion, which excludes Thursday's figure. However, NTPC does not have any redemption due for this month, and it has tapped the market for the first time in Nov.

The other two issuers were Tata Capital and Axis Securities and each issued a three-month paper to raise INR 5 billion and INR 2.25 billion respectively. Tata Capital raised the amount at 7.47% and the rate which Axis Securities locked in was 7.51%. 

The amount raised through certificates of deposit also saw a rise to INR 20 billion against nil on Tuesday. The CD segment saw a single issuance from IndusInd Bank. The bank raised the entire sum of INR 20 billion from a one-year paper at 7.70%. Other banks remained on the sidelines as most of them had already met their redemption amounts, dealers said. The total amount raised in Nov. stands at INR 572.50 billion, against the maturing figure of INR 629.45 billion.

Market participants said, because of improved deposit growth, banks are likely to trim down their borrowing from the CD market. As of Oct. 18, bank deposit growth was at 11.7% on year compared with the advances' growth of 11.5%. However, dealers also said that a slowdown in issuances will be visible only after January, when the seasonal demand eases. "Dec-Jan period usually sees a cyclic rise in banks' demand for funds, but if the deposit growth sustains and surplus liquidity is at a comfortable level then the market could see a slight ease in CD issuances," a dealer with a state-owned bank said. 

Meanwhile, volumes in the secondary market remained firm on Thursday owing to ample funds with mutual funds, dealers said. "Mutual fund houses have considerably increased in size, and they need to diversify their portfolios, which leads them to remain active participants in the secondary market as well," a fund manager with a brokerage firm said. The volume of CDs traded in the secondary market was at INR 55.85 billion, against INR 61.10 billion on Tuesday. For CPs, the amount was at INR 60.85 billion, up from INR 41.50 billion the previous day. 

--Primary market

* IndusInd Bank raised funds through CD.

* NTPC Ltd, Tata Capital, Axis Securities and National Bank for Agriculture and Rural Development raised funds through CP.

--Secondary market

* Punjab National Bank's CD maturing on Nov 22 was dealt twice at a weighted average yield of 6.7172%.
* Reliance Jio Infocomm's CP maturing on Nov. 22 was dealt six times at a weighted average yield of 6.8071%.

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 Deepshikha Bhardwaj

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