Informist, Friday, Jun 3, 2022

By Vishal Sangani

MUMBAI – Issuances of certificate of deposits rose as the Indian Bank and the Small Industries Development Bank of India tapped the market to meet fresh requirements for funds, dealers said.

The state-owned bank and other financial institutions also raised funds to roll over papers set to mature in the coming days.

So far today, CDs worth 12.50 bln rupees were issued, as against nil on Thursday. The Indian Bank was the major issuer, raising 10.00 bln rupees through papers maturing on Aug 8 at 4.95%.

The Indian Bank had issued the most CDs in April, raising 112.75 bln rupees through CDs, as per data compiled by Informist.

Supply of CDs is expected to rise in the coming days as the bank will tap the market to rollover CDs which are about to mature and because of a pick-up in demand for credit due to an uptick in business activity.

Banks will also raise funds as liquidity in the banking system is expected to narrow.

Liquidity in the banking system is currently estimated to be in a surplus of over 3.64 trln rupees as against 3.78 trln rupees on Thursday. Liquidity surplus is expected to narrow in the coming days due to outflows on account of excise duty payments.

Rates on short-term debt papers were flat because as there are no major events that could have a significant impact on the market.

Rates on three-month commercial papers of non-bank finance companies were quoted at 5.40-5.70%, while those on papers of manufacturing companies were quoted at 5.15-5.40%.

Rates on three-month CDs were quoted at 5.05-5.25%.

On the other hand, fundraising through commercial papers were steady as a few companies tapped the market to roll over papers set to mature in the coming days and also to meet their funding requirements, dealers said.

So far today, CPs aggregating 30.25 bln rupees were issued, as against 27.00 bln rupees on Wednesday. Indian Oil Corp was the major issuer, raising 25.00 bln rupees through papers maturing on Jul 29 at 4.98%.

Meanwhile, some market participants were also cautious of taking positions ahead of the policy review next week, set to be detailed on Wednesday.

A majority of market participants expect the Monetary Policy Committee to raise the repo rate by 35- to 50-basis-points to curb inflation.

--Primary market

* Godrej Industries, Tata Power Co, KEC International and Indian Oil Corp raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing on Aug 17 was dealt at a weighted average yield of 5.0498%

* Housing Development Finance Corp's CP maturing on Jun 10 was dealt twice at a weighted average yield of 4.3001%

At 1530 IST, the following were the volumes--in bln rupees--in the secondary market for short-term debt, 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 Vidhi Verma

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