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Informist, Thursday, Dec. 12, 2024

By Siddhi Chauhan

MUMBAI – Issuances in the short-term debt market fell on Thursday due to tepid demand from mutual funds due to redemption pressure, dealers said. On Thursday, non-banking financial institutions, manufacturing companies and housing finance raised INR 3 billion against INR 33.50 billion on Wednesday, while banks raised INR 5 billion through certificates of deposit against INR 20 billion on the previous day, dealers said. 

Kotak Securities and Tata Projects were the only issuers in the CP market on Thursday. Kotak Securities raised INR 1 billion through CP maturing in three months at 7.43%, while Tata Projects mopped up INR 2 billion through CP maturing in six months at 7.80%. On Wednesday, National Bank for Agriculture and Rural Development was the largest issuer of CP, raising INR 10 billion via a three-month paper at 7.16%.

"CP issuances are quite less today (Thursday) because of very little demand from investors. There are no buyers right now, mutual funds are also facing selling pressure because of the quarter-end," a dealer at a brokerage firm said.

Canara Bank was the sole issuer of CDs, raising INR 5 billion through paper maturing in one year at 7.52%. Market participants attributed the tepid demand from mutual funds as the reason for the fall in CD issuances. 

On Thursday, rates on CP issued by manufacturing companies with three-month maturity were quoted at 7.20-7.25%, unchanged from the previous close. Rates of papers of similar maturity issued by non-banking financial entities settled at 7.40-7.45%, unchanged from the previous day. Rates on three-month CDs also remained unchanged at 7.15-7.20%.

While the primary market saw little activity, the volume in CP secondary market rose sharply. "Mutual funds are not buying any fresh paper, instead they are selling three-month maturity paper in the secondary market," a dealer at another brokerage fund said. "They are doing so because they need to gather funds because of redemption pressure." 

--Primary market

* Canara Bank raised funds through CD.

* Kotak Securities and Tata Projects raised funds through CP.

--Secondary market

* HDFC Bank's CD maturing on Mar. 12 was dealt 11 times at a weighted average yield of 7.1583%.
* Bharti Airtel's CP maturing on Dec. 12 was dealt twice at a weighted average yield of 6.7537%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

End

Edited by Saji George Titus

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