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Informist, Friday, Jan. 10, 2025

By Siddhi Chauhan

MUMBAI – Issuances in the short-term debt market were subdued on Friday as issuers had already met their funding requirements in the beginning of the week, dealers said. From Monday till Thursday, the cumulative amount raised through commercial papers was INR 76 billion while the amount raised through certificates of deposit was INR 196 billion.

On Friday, only INR 3 billion were raised through commercial papers against INR 7 billion on Thursday. Banks did not raise funds through CDs on Friday. This was despite the banking system liquidity tightening. On Thursday, the net liquidity injected by the Reserve Bank of India--a proxy for systemic liquidity conditions--rose to INR 2.01 trillion against INR 1.82 trillion on Wednesday.

"In the start of the week itself, we saw borrowing of INR 100 billion in a single day. Those who were in need of funds already borrowed at that time," a dealer at a state-owned bank said. "Also, the rates are quite high, which is keeping banks from borrowing." Rates on three-month CDs issued by banks were quoted at 7.50-7.55%, flat from the previous day.

In the commercial paper segment, Godrej Industries and GIC Housing were the only issuers, each raising INR 1.5 billion for three months. The former issued the paper at 7.85% while the latter borrowed at a rate of 7.99%. On Thursday, Birla Group Holdings was the sole issuer, raising INR 7 billion at 7.82% through a paper maturing in March. Rates on three-month CPs issued by manufacturing companies were at 7.55-7.60%, flat versus Thursday. Rates on similar-maturity CPs issued by non-banking finance companies were also unchanged from Thursday at 7.80-7.85%.

"Most of the issuer's demand has already been met, although there were some issuers who wanted to borrow but couldn't do so due to lack of funds from mutual funds," a dealer at a brokerage fund said. "In order to meet their fund requirement, mutual funds were selling September maturity paper and going long on longer tenure ones."

--Primary market

* Godrej Industries, GIC Housing raised funds through CPs.

* No funds were raised funds through CDs.

--Secondary market

* Punjab National Bank's CD maturing on Feb. 20 was traded six times at a weighted average yield of 7.3404%.
* Export and Import Bank of India' CP maturing on Jan. 13 was traded thrice at a weighted average yield of 6.8743%.

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 Ashish Shirke

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