More Stories

Informist, Friday, Dec. 27, 2024

By Siddhi Chauhan

MUMBAI - Fundraising through the short-term debt market was steady on Friday as issuers waited for rates on the short-term debt instruments to cool down, dealers said. Banks raised funds worth INR 52 billion through certificates of deposits against INR 55.75 billion raised on Thursday.

According to market experts, investors are avoiding raising funds currently due to high rates. "Only the banks that are in need of funds are borrowing at a time when rates are high. Otherwise, most of the banks have met their fund requirements early in the month," a dealer at a private bank said.

On Friday, Indian Bank and Export-Import Bank of India were the largest issuers of CDs, both raising INR 20 billion each. Indian Bank raised funds through papers maturing in March at a rate of 7.15%, while Export-Import Bank of India raised funds through CDs maturing in one year at a coupon of 7.64%.  

On Thursday, Canara Bank was the largest issuer of CD, raising INR 38 billion through a one-year paper at 7.66%.  

The commercial paper market also experienced a lull, with no companies tapping into it on Friday, compared with INR 6.5 billion raised the previous day. "CP issuances were low today because of high rates. Many manufacturing companies prefer to borrow from banks instead of raising funds through CPs," a dealer at a brokerage firm said, "The rates have risen as mutual funds don't have enough funds with them."

Rates, however, remained steady on Friday as primary market issuances were muted, dealers said. Rates on three-month certificates of deposit issued by banks were quoted at 7.40-7.45%. Similarly, rates on three-month commercial papers issued by manufacturing companies were at 7.45-7.50% and rates on similar-maturity CPs issued by non-banking finance companies were at 7.50-7.55%.

"Short-term debt rates, though, are steady today (Friday), but have risen in the past few days due to cash crunch from mutual funds," a dealer at another brokerage firm said. "Mutual funds are facing redemption pressure ahead of the month and year-end."

--Primary market

* Canara Bank, Indian Bank, Punjab National Bank and Export and Import Bank of India raised funds through CDs.

* No fund was raised through CP.

--Secondary market

* Federal Bank's CD maturing on Jan. 22 was dealt once at a weighted average yield of 7.6602%.
* L&T Finance Ltd's CP maturing on Dec. 30 was dealt twice at a weighted average yield of 6.7893%.

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:

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 Akul Nishant Akhoury

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.