Informist, Thursday, Nov 30, 2023
By Asmita Patil
MUMBAI – Fundraising through commercial paper fell today as most issuers exercised caution after the recent rise in rates amid deficit liquidity in the banking system, dealers said.
So far today, companies and financial institutions have raised 19.25 bln rupees through CPs compared with 26 bln rupees on Wednesday. Of the total 26 bln rupees raised through CPs on Wednesday, Reliance Retail Ventures mobilised 21 bln rupees through papers maturing in three months at 7.41%.
“Mutual funds are not keen on investing at these levels as there is a lot of uncertainty about rates,” a dealer with a mid-sized brokerage firm said.
On Wednesday, rates on short-term instruments rose by around 5 basis points due to constrained liquidity in the banking system, dealers said.
At the end of trade on Wednesday, liquidity in the banking system was in a deficit of 1.04 trln rupees, as against 1.10 trln rupees on Tuesday, according to the Reserve Bank of India data.
So far this month, rates on three-month CPs issued by non-banking finance companies have risen by around 15 basis points, against a rise of 5 bps in rates of CPs issued by manufacturing companies and certificates of deposit.
Rates on three-month commercial papers issued by non-banking finance companies remained flat at 7.85-8.05% today. Rates on papers of similar maturity issued by manufacturing companies were at 7.40-7.60%.
Rates on three-month certificates of deposit were quoted at 7.30-7.50%. None of the banks issued CDs today.
–Primary market
* Reliance Retail Ventures, L&T Finance, Tata Power Co, and Motilal Oswal Financial Services raised funds through CPs.
–Secondary market
* Punjab National Bank’s CD maturing on Dec 26 was dealt thrice at a weighted average yield of 7.1495%.
* Reliance Retail Ventures’s CP maturing on Friday was dealt six times at a weighted average yield of 6.8633%.
At 1700 IST, the 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:
End
Edited by Vidhi Verma
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