Informist, Friday, Jun 2, 2023
By Vishal Sangani
MUMBAI – Issuances of commercial papers crossed the 200-bln-rupee mark today, primarily because of large deals by National Bank for Agriculture and Rural Development and Small Industries Development Bank of India.
The financial institutions tapped the market to meet fresh capital requirements and to roll over papers set to mature in the coming days, dealers said.
So far today, CPs aggregating 217.30 bln rupees were issued, against 38.50 bln rupees on Thursday. NABARD was the biggest issuer, raising 100 bln rupees through papers maturing in three months at 6.95%.
SIDBI raised 80 bln rupees through papers maturing in three months at 6.94%.
The supply of papers by big-ticket issuers was readily absorbed because of their low risk profile.
Non-banking financial companies were the major issuer today they raised funds to meet their credit disbursement requirement.
Some companies also tapped the market to meet their funding requirements and to take advantage of a fall in rates, dealers said.
Rates on short-term debt papers had declined by 15-20 basis points in last three days as liquidity surplus widened in the banking system.
Rates on short-term debt decline further today due to steady demand from mutual funds and liquidity surplus widened further, dealers said.
There is a steady inflow in liquid funds of mutual funds, which is being deployed in such papers. Mutual funds are also reinvesting the funds received from maturity of short-term papers.
Rates on three-month CPs issued by non-banking financial companies were down at 7.05-7.20% from 7.10-7.25% on Thursday, while rates on papers of manufacturing companies fell by five basis points to 6.95-7.15%.
Rates on three-month CDs were down at 6.85-7.05% from 6.95-7.15% on Thursday.
Liquidity in the banking system is currently estimated to be in a surplus of 2.40 trln rupees, up from 1.76 trln rupees on Thursday. The surplus widened due to some inflows on account of the government’s spending in the form of salaries and pension payout, dealers said.
A few dealers said surplus liquidity may also increase due to deposits received from 2,000-rupee banknotes.
On May 19, the central bank announced the withdrawal of 2,000-rupee denomination banknotes from circulation by Sep 30. However, it clarified that these banknotes would continue to be legal tender. The public can deposit 2,000-rupee banknotes into their bank accounts or exchange them with banknotes of other denominations at any bank branch, the RBI said.
On the other hand, Bank of Baroda and Punjab National Bank raised 24 bln rupees in total through CDs.
–Primary market
* Bajaj Finance, ICICI Securities, L&T Metro Rail (Hyderabad), Small Industries Development Bank of India, Reliance Retail Ventures, Motilal Oswal Financial Services, Sundaram Finance, and National Bank for Agriculture and Rural Development raised funds through CPs.
–Secondary market
* Axis Bank’s CD maturing on Jun 5 was dealt three times at a weighted average yield of 6.4030%
* Reliance Retail Ventures’ CP maturing on Jun 5 was dealt two times at a weighted average yield of 6.3543%
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 Manisha Baxla
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