Informist, Thursday, Sep 21, 2023

By Subhana Shaikh

MUMBAI – Small Industries Development Bank of India was the lone issuer of commercial papers in the short-term debt market today.

The state-owned issuer tapped the market twice today to meet its funding requirements, raising 22.50 bln rupees through papers maturing in three months at a coupon of 7.15%, dealers said. This comes after the company on Monday raised 7.5 bln rupees through a similar structure.

On Tuesday, companies and financial institutions raised 15 bln rupees though CPs. Larsen & Toubro was the largest issuer, raising 10 bln rupees through papers maturing in three months at 7.06%.

"Actually, activity in the primary market is kind of muted. The US Fed's decision was on expected lines. Market is waiting for other fresh triggers," a dealer with a mid-sized brokerage firm said.

The US Federal Open Market Committee kept the federal funds target range unchanged at 5.25-5.50%, which was in line with the market's expectations. However, projections by US Federal Reserve officials indicated that rates in the world's largest economy would remain higher for longer. 

There were no issuance of certificate of deposits today. On Monday, Bank of Baroda raised 30 bln rupees through CDs maturing in three months at 7.02%.

Meanwhile, secondary market rates were said to have been largely flat. Rates on three-month CPs issued by non-banking financial companies were quoted at 7.30-7.50%. Rates on papers of manufacturing companies were at 7.10-7.30%.

Rates on three-month certificates of deposit were quoted at 7.05-7.25%.

According to dealers, demand from mutual funds for papers maturing in February and March fell, with investors keen on selling these papers after the recent aggressive buying, as mutual funds are increasing their duration.

"...they (mutual funds) want to liquidate their holdings and want to increase their durations, so these mutual funds are liquidating their short-term assets," a dealer said.   

--Primary market 

* Small Industries Development Bank of India raised funds through CPs

--Secondary market

* Bank of Baroda's CD maturing on Oct 4 was dealt six times at a weighted average yield of 7.0989%.

* Small Industries Developmnt Bank of India's CP maturing on Friday was dealt 10 times at a weighted average yield of 6.8006%.

At 1725 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

Edited by Akul Nishant Akhoury

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