Informist, Wednesday, May 10, 2023

By Vishal Sangani

MUMBAI – Punjab National Bank was the lone issuer of certificates of deposit today. The state-owned bank raised 35 bln rupees through papers maturing in March at 7.47%, tapping the market to meet fresh capital requirements and to roll over papers set to mature in the coming days, dealers said.

On Tuesday, Punjab National Bank and Canara Bank had raised 45 bln rupees in total through CDs.

Other banks stayed on the sidelines as they did not feel the need to raise funds urgently, and as liquidity in the banking system is in surplus. Liquidity in the banking system is currently estimated to be in a surplus of 345.52 bln rupees, up from 228.94 bln rupees on Tuesday. The surplus has widened due to inflows on account of the government's spending.

While issuances of commercial papers declined today as some companies weren't in an immediate need for funds, and also because there were few rollovers in the primary market.

Supply by non-banking finance companies was also low because they have already rolled over papers set to mature in the next few days.

So far today, CPs aggregating 27.50 bln rupees were issued, against 39.50 bln rupees on Tuesday. Reliance Retail Ventures was the major issuer, raising 25 bln rupees through papers maturing in three months at 7.20%.

The supply of papers by big-ticket issuers was readily absorbed because of their low risk profile.

Only two companies have tapped the market so far, compared to six companies that raised funds on Tuesday.

Rates on short-term debt papers were steady due to lower market participants, dealers said.

Rates on three-month CPs issued by non-banking finance companies quoted at 7.40-7.60%, while rates on papers of manufacturing companies were quoted at 7.25-7.50%.

Rates on three-month CDs were quoted at 7.15-7.35%.

A few market participants expect rates on short-term debt papers to increase in the coming days, tracking the higher cutoff set by the Reserve Bank of India at the Treasury-bill auction.

Today, the cut-off yield at the auction for 91-day Treasury-bills was set at 6.9482% as against 6.8984% on May 10.

Usually, short-term debt papers are issued at a premium over the yield on Treasury bills.

--Primary market

* Reliance Retail Ventures, and Tata Motors Finance raised funds through CPs.

--Secondary market

* Union Bank of India's CD maturing on Jun 12 was dealt five times at a weighted average yield of 7.0504%

* Reliance Industries' CP maturing on May 12 was dealt nine times at a weighted average yield of 7.1020%

At 1630 IST, 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 Avishek Dutta

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