Informist, Tuesday, Jan 11, 2022

By Vishal Sangani

MUMBAI – Issuances of commercial papers rose today, primarily due to large deals by Hindustan Petroleum Corp and National Bank for Agriculture and Rural Development.

These companies tapped the market to roll over papers set to mature in the coming days, and to meet fresh requirement for funds.

So far today, CPs aggregating 17.25 bln rupees were issued, as against 12.75 bln rupees on Monday.

However, action in the short-term debt market was muted as most issuers were on the sidelines due to low demand for funds, dealers said. Participation was also low because attendance at treasury desks has been hit due to a rise in COVID-19 cases.

In line with trends in the past few sessions, rates remained in a narrow range. Rates on three-month CPs of manufacturing companies were quoted at 3.80-4.00%, while those on papers of non-bank finance companies were quoted at 4.05-4.25%.

Market participants expect rates on short-term debt papers to increase marginally in the coming days because surplus liquidity in the banking system has narrowed.

Liquidity in the banking system is estimated to be in a surplus of over 6.64 trln rupees, as against 7.03 trln rupees on Monday. The surplus narrowed due to the outflows on account of excise duty payments and payments for government bonds.

The RBI today conducted a seven-day variable rate reverse repo auction, which saw banks park 1.75 trln rupees as against the notified amount of 2.00 trln rupees.

Market participants said that the seven-day variable rate reverse repo auction was not fully subscribed, as banks were reluctant to park the full amount due to a decline in surplus liquidity.

Owing to the decline in liquidity today, the triparty repo weighted average rate was 3.48% as against 3.40% on Monday.

Federal Bank was the lone issuer of certificates of deposit today, dealers said. The private bank raised 5 bln rupees through papers maturing in three months to meet funding needs.

Rates on three-month CDs were quoted at 3.65-3.85% in the secondary market.

--Primary market

* Godrej Industries, Hindustan Petroleum Corp, Godrej Agrovet and National Bank for Agriculture and Rural Development raised funds through CPs.

--Secondary market

* Bank of Baroda's CD maturing on Apr 11 was dealt thrice at a weighted average yield of 3.7001%

* Cholamandalam Investment & Finance Co's CP maturing on Jan 31 was dealt at a weighted average yield of 3.7109%

Following are volumes at 1530 IST in the secondary market for short-term debt, in bln rupees, 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 Avishek Dutta

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