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Informist, Friday, Jan. 3, 2025

By Kabir Sharma

MUMBAI – The first week of the New Year ended with continued low activity in the short-term debt market as no certificates of deposit were issued Friday, while the commercial paper market saw only a couple of issuances. "There is not much demand for funds from banks right now as liquidity is comparatively at comfortable levels," a dealer at a private bank said.

"Money market rates have also cooled off because of inflows of government's month-end spending, so nobody is raising funds via CD," a dealer at a state-owned bank added.

The amount of liquidity injected by the Reserve Bank of India has steadily reduced over the course of the week as liquidity conditions improved due to the government's scheduled spending. While on Monday the central bank had to provide a net INR 2.06 trillion, the figure had fallen to INR 674.45 billion on Thursday, as per latest data.

In the commercial paper market, L&T Finance Ltd. and Axis Securities Ltd. raised funds through papers maturing in January itself. While the former raised INR 8.00 billion at 7.40%, the latter raised INR 2.50 billion at 7.43%. According to dealers, issuers are waiting for rates to "cool off". "Once that happens, issuances will pick up," a dealer with a brokerage firm said. Rates on three-month commercial papers issued by non-banking finance companies traded in the range of 7.40-7.45% on Friday, dealers said.

--Primary market

* L&T Finance and Axis Securities raised funds through CPs.

* No CDs were issued on Friday.

--Secondary market

* HDFC Bank's CD maturing on Mar. 12 was traded eight times at a weighted average yield of 7.1818%.
* Tata Capital Ltd's CP maturing on Monday was traded once at 6.3421%.

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 Akul Nishant Akhoury

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