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Informist, Thursday, Dec. 19, 2024

By Siddhi Chauhan 

MUMBAI – Issuances of commercial papers picked up on Thursday as non-banking financial institutions, manufacturing companies and housing finance companies tapped the short-term debt market ahead of the maturity of many CPs, dealers said. On Thursday, CPs worth around INR 42.25 billion were issued against INR 2.50 billion on Wednesday. 

"Many CPs are about to mature this week, that is why we are seeing a pickup in CP issuances," a dealer at a brokerage firm said. "This is expected to continue going forward due to quarter-end needs of companies and upcoming maturity of papers." In December, CPs worth INR 1.51 trillion are due for redemption.

On Thursday, Indian Railway Finance Corp was the largest issuer of CPs, raising INR 20.25 billion through a three-month paper at a rate of 7.25%. It was followed by Birla Group Holdings, which raised INR 6.5 billion through paper maturing in three months at a rate of 7.80%. On Thursday ICICI Securities was the sole issuer of CPs raising INR 2.50 billion through a three-month paper at 7.60%.

Rates on three-month commercial papers issued by manufacturing companies were little changed from Wednesday's level of 7.30-7.35%. Similarly, those on similar-maturity papers issued by non-banking financial companies were also little changed to 7.50-7.55% levels seen on Wednesday.

On the certificates of deposit side, issuances fell as banks refrained from raising funds due to a rise in rates. "The papers which were available at 7.60% levels have now risen to 7.70-7.80% levels, similar was the case with CDs as well," a dealer at a brokerage firm said. "The main reason for this rise is outflows for goods and services tax which have stared from today (Thursday)." The rates on three-month certificates of deposits rose to 7.25-7.30% against 7.19-7.25%. 

Outflows for goods and services tax, which likely started from Thursday, are expected to drain around INR 1 trillion to 1.5 trillion collectively from the banking system liquidity. On Wednesday, the system liquidity stood at a deficit of INR 1.51 trillion, according to data from RBI. 

On Thursday, Bank of Baroda raised INR 10 billion through one-month CD at a rate of 7.30%. On Wednesday, banks had raised INR 35.00 billion 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 was Bank of Maharashtra, which borrowed INR 10.00 billion via a three-month paper at 7.29%.

--Primary market

* Bank of Baroda raised funds through CDs.

* IGH Holdings, Birla Group Holdings, Tata Capital, Godrej Properties, Axis Securities, ICICI Securities and Indian Railway Finance Corp raised funds through CP.

--Secondary market

* Punjab National Bank's CD maturing on Dec. 20 was dealt 17 times at a weighted average yield of 6.6657%.
* Reliance Retail Ventures Ltd's CP maturing on Dec. 20 was dealt five times at a weighted average yield of 6.6319%.

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 Deepshikha Bhardwaj

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