More Stories

Informist, Wednesday, Dec. 18, 2024

By Vidhushi RajPurohit

MUMBAI – Issuances of certificates of deposit picked up slightly on Wednesday owing to banks' need for funds in view of the large amount of papers set to mature this month, dealers said. Deficit liquidity in the banking system and funding needs at the end of the quarter were also behind the high activity of issuers.

In December, INR 1.47 trillion worth of CDs are due for redemption, more than double the INR 629.45 billion that matured in November. Banks have so far borrowed INR 891.10 billion this month. Meanwhile, banks are also facing a cash crunch as liquidity conditions keep tightening, with the Reserve Bank of India having infused INR 1.45 trillion on Tuesday, up from INR 1.10 trillion on Monday, as advance tax payments weighed.

Market participants said fresh issuances of CDs over and above that required to meet redemptions are likely to moderate this month as banks are going slower on credit disbursals. "Issuances this month will be largely to fund the maturing papers, as fresh issuances have been dwindling as the credit growth has eased now," a dealer with a private bank said.

The total amount raised through CDs on Wednesday was INR 35.00 billion, higher than the INR 29.00 billion borrowed on Tuesday, with HDFC Bank the largest issuer after it raised INR 17.00 billion through a three-month paper at 7.23%. The other big issuer on Wednesday was Bank of Maharashtra, which borrowed INR 10.00 billion via a three-month paper at 7.29%.

In the commercial papers segment, borrowings fell to INR 2.50 billion from INR 7.50 billion on Tuesday. Market participants said large issuances by companies and non-bank lenders earlier in the month have led to a decline in CP issuances. In December, CPs worth INR 1.51 trillion are due for redemption, with companies having already issued papers amounting to INR 1.01 trillion.

ICICI Securities was the sole issuer of CPs on Wednesday, raising INR 2.50 billion through a three-month paper at 7.60%. A slight increase in issuances in the coming days is expected due to quarter-end funding needs of companies, with a mutual fund dealer predicting activity would "pick up once the rates have cooled down, which is expected to happen because of demand (for papers) from fund houses".

Rates on three-month commercial papers issued by manufacturing companies rose to 7.30-7.35% from 7.25-7.30% on Tuesday, while those on similar-maturity papers issued by non-banking financial companies edged lower to 7.50-7.55% from 7.55-60%.

--Primary market

* HDFC Bank, Bank of Baroda, Bank of Maharashtra, and AU Small Finance Bank raised funds through CDs.

* ICICI Securities raised funds through CP.

--Secondary market

* Bank of Baroda's CD maturing on Mar. 10 was dealt five times at a weighted average yield of 7.2391%.
* Small Industries Development Bank of India's CP maturing on Dec. 19 was dealt six times at a weighted average yield of 6.7032%.

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

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.