Informist, Wednesday, Mar 29, 2023
By Vishal Sangani
MUMBAI – Issuances of commercial papers increased today as non-banking finance companies tapped the market to meet their funding requirement and to roll over papers set to mature in the coming days, dealers said.
A few non-banking finance companies also raised funds to meet their credit disbursement requirement.
So far today, CPs aggregating 31.50 bln rupees were issued, as against nil on Tuesday. Small Industries Development Bank of India was the major issuer, raising 20 bln rupees through papers maturing on Mar 15, 2024 at 7.75%.
CP issuances by state-owned companies remained low as they refrained from raising short-term debt due to higher cost of borrowing. Instead, they took recourse to alternative sources of funds such as working capital loans from banks.
Indian financial markets are closed on Thursday on account of Ram Navami.
Banks did not issue any certificates of deposit today as there is no immediate need for funds and liquidity is in surplus in the banking system.
On Friday, National Bank for Agriculture and Rural Development had raised 6 bln rupees through CDs.
Liquidity in the banking system is currently estimated to be in a surplus of 135.83 bln rupees, against a deficit of 455.75 bln rupees on Tuesday. Liquidity in the banking system returned to surplus due to inflows on account of the government’s month-end spending, dealers said.
The liquidity surplus may widen further in the coming days due to inflows on account of the government’s month-end spending in the form of salaries and pension payouts.
Rates on short-term debt papers were in a narrow range due to the surplus liquidity in the banking system, dealers said.
Rates on three-month CPs issued by non-banking finance companies quoted at 7.80-8.05%, while rates on papers of manufacturing companies quoted at 7.60-7.80%.
Rates on three-month CDs quoted at 7.50-7.70%.
In the secondary market, rates on short-term debt papers maturing in 5-10 days were traded in the range on 7.50-9.26% as mutual funds were facing redemption pressure in their liquid schemes due to fund requirements of institutional investors as the financial year approaches an end.
Companies usually park their money in liquid schemes to meet their short-term fund needs rather than leave cash idle. This results in sharp inflows and outflows in the category on a cyclical basis.
–Primary market
* Aditya Birla Housing Finance, LIC Housing Finance, SIDBI and Can Fin Homes raised funds through CPs.
–Secondary market
* NABARD’s CD maturing on Mar 28, 2024 was dealt three times at a weighted average yield of 7.7400%
* Larsen & Toubro’s CP maturing on Friday was dealt two times at a weighted average yield of 6.9315%
At 1631 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 Ashish Shirke
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