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Informist, Monday, Dec. 30, 2024

By Kabir Sharma

MUMBAI – Issuances in the short-term debt market rose on Monday amid continued liquidity deficit in the banking system, which led banks to issue certificates of deposit, dealers said. With demand for year-end credit and some outflows, banks were in need of funds and opted for short-term debt instruments, they added.

"The liquidity is tight and outflows are also there, so there is some supply in CDs. But banks might wait for rates to cool off before raising aggressively," a dealer at a state-owned bank said. Rates on three-month certificates of deposit issued by banks were in the range of 7.40-7.45%, the same as Friday. Rates on similar-maturity commercial papers issued by non-banking finance companies were also unchanged from Friday's levels of 7.50-7.55%. On the liquidity front, the Reserve Bank of India injected INR 1.83 trillion on Sunday, largely unchanged from what it had provided over the previous few days as the systemic liquidity deficit was little changed despite the addition of around INR 600 billion following the implementation of the second of the two-step reduction in the Cash Reserve Ratio on Saturday, announced by the RBI earlier this month on Dec. 6.

On Monday, banks raised INR 71.00 billion through CDs, up from INR 52.00 billion Friday, with Punjab National Bank raising INR 25.00 billion through a one-year paper at 7.68% and INR 10.00 billion through a three-month paper at 7.45%. The remaining INR 36.00 billion was mopped up by HDFC Bank through a three-month paper, also at 7.45%.

Meanwhile, activity in the commercial paper market remained subdued on Monday, with companies raising INR 3.50 billion after no issuances on Friday. However, a dealer at a brokerage firm said that the deals "that took place today were of January value date because issuers are getting better levels compared to December."

Bajaj Financial Securities Ltd. raised INR 3.00 billion through commercial papers maturing in March, while Julius Baer Capital raised INR 500 million through a commercial paper with the same maturity.

--Primary market

* Bajaj Finance Securities and Julius Baer Capital raised funds through CPs.

* HDFC Bank and Punjab National Bank raised funds through CDs.

--Secondary market

* HDFC Bank's CD maturing on Feb. 20 was dealt thrice at a weighted average yield of 7.5002%.
* Bharti Telecom Ltd's CP maturing on Oct. 17 was dealt 16 times at a weighted average yield of 8.3650%.

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

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