Informist, Tuesday, Dec 5, 2023
By Asmita Patil
MUMBAI – Fundraising through certificates of deposit gained traction today due to robust demand from mutual fund houses, dealers said. Canara Bank, Jammu and Kashmir Bank, and Punjab National Bank together raised around 59 bln rupees through CDs, they said.
“Mutual funds have received some inflows which they have deployed in CDs,” said a dealer with a mid-sized brokerage firm.
Canara Bank, which raised 46 bln rupees through three-month CDs at 7.38%, was the largest issuer.
On Monday, Punjab National Bank had raised around 60 bln rupees through two papers of different maturities.
Banks also stepped up issuances on expectation that liquidity in the banking system will remain tight for the foreseeable future.
“Liquidity improved at the start of the month but going forward it will remain tight due to advance tax and GST payments, so these levels will stay like this for a while,” said a dealer with a public sector bank. Rates on three-month CDs remained flat at 7.30-7.50%.
At the end of trade on Monday, liquidity in the banking system was in a surplus of 63.78 bln rupees, against a surplus of 262.39 bln rupees on Sunday, according to data with the Reserve Bank of India. Liquidity in the banking system bounced back to surplus last week because of the government’s month-end spending amounting to 500-600 bln rupees.
Fundraising through commercial papers also rose due to a big issuance by National Bank for Agriculture and Rural Development, dealers said. The state-owned entity raised around 40 bln rupees through papers maturing in three months at 7.39%.
So far today, companies and financial institutions have raised 51 bln rupees through CPs against 25 bln rupees on Monday.
Rates on three-month CPs issued by non-banking finance companies were quoted at 8.00-8.20%. Rates on papers of similar maturity issued by manufacturing companies were at 7.45-7.65%.
–Primary market
* NABARD, HSBC Investdirect Financial Services India, Axis Securities, Toyota Financial Services India, and HDFC Securities raised funds through CPs.
* Punjab National Bank, Jammu & Kashmir Bank, and Canara Bank raised funds through CDs
–Secondary market
* Punjab National Bank’s CD maturing on Wednesday was dealt four times at a weighted average yield of 6.8268%.
* HDFC Bank’s CP maturing on Dec 26 was dealt thrice at a weighted average yield of 7.3235%.
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 Ashish Shirke
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