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MUMBAI – Issuances in the primary market saw a slight pickup on Friday after banks and companies stayed on the sidelines the day before. No primary issuances of certificates of deposit and commercial paper were issued on Thursday. "Issuers have already met their repayment needs, so the activity is a bit fragmented as today is the last working day for November," a dealer with a brokerage firm said. As of Nov. 26, banks raised CDs worth INR 793.75 billion during the month compared with the redemption amount of INR 629.45 billion for the month. CPs worth INR 1.01 trillion were raised so far during the month, against the maturity of 1.14 trillion.

On Friday, three banks tapped the CD market to mop up a total of INR 34.50 billion. Union Bank of India was the largest issuer, raising INR 17 billion at 7.19% through a three-month paper. Indian Bank raised INR 12.50 billion through a three-month CD and HDFC Bank raised INR 5 billion at 7.14% through a paper, maturing on Jan. 14. 

"Activity in the primary market will pick up further in December as it is a cyclical thing for borrowing to increase at quarter-end," a dealer with a state-owned bank said. Dealers also said the high maturity amount for December will prompt more issuances. As of now, the redemption amount for December stands at INR 1.46 trillion for CP and 1.47 trillion for CD.

Grasim Industries was the sole issuer of CPs on Friday. The company borrowed INR 4 billion through a paper due to mature in February at 7.22%. Amid the low activity in the market, the rates for short-term debt instruments remained flat. The three-month commercial paper issued by manufacturing companies was quoted at 7.25-7.30%, the same as the previous day. Papers of similar maturity issued by non-banking financial companies were at 7.45-7.50%. For CDs, the rates were at 7.18-7.23%. 

Trades in the secondary market moderated on Friday, as there was no selling pressure on mutual funds, dealers said. "Friday, usually the volume in the secondary market is a bit low as banks are not that active on the buying side due to their cash reserve requirements," a dealer with a private bank said. "Fund houses are also a bit relieved from the month-end redemption pressures, which leads them to actively sell the shorter tenure papers." The volume of certificates of deposit traded was INR 33.60 billion, against INR 62.65 billion on Thursday. For commercial paper, the amount was INR 13.85 billion, a sharp fall from INR 80.25 billion the previous day. 

--Primary market

* Indian Bank, Union Bank of India and HDFC Bank raised funds through CD.

* Grasim Industries raised funds through CP.

--Secondary market

* Canara Bank's CD maturing on Mar. 11 was dealt six times at a weighted average yield of 7.2101%.
* L&T Finance's CP maturing on Dec. 24 was dealt once at a weighted average yield of 7.3500%.

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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