Informist, Wednesday, Dec 6, 2023
By Asmita Patil
MUMBAI – Fundraising through commercial paper fell today due to lack of big ticket issuances ahead of the Reserve Bank of India’s monetary policy decision on Friday, dealers said. So far in the day, companies and financial institutions have raised 25.25 bln rupees through CPs against 51 bln rupees on Tuesday.
On Tuesday, National Bank for Agriculture and Rural Development raised around 40 bln rupees through papers maturing in three months at 7.39%.
Issuances of CPs were absorbed easily by mutual fund houses due to their small ticket-size and rise in inflows in the liquid schemes of mutual funds, dealers said.
Rates on three-month CPs issued by non-banking finance companies remained flat at 8.00-8.20%. Rates on papers of similar maturity issued by manufacturing companies were at 7.45-7.65%.
Rates on three-month certificates of deposits were quoted at 7.30-7.50%. Banks continue to tap the short-term debt market given the robust demand from mutual funds and tight liquidity in the banking system.
HDFC Bank was the biggest issuer of CDs today. The bank raised 30 bln rupees through one-year papers at 7.85%.
“Because of (tight) liquidity, deposits are slightly on the higher side…as a result, issuances of CDs on the shorter-end (three-month CDs) have gone up,” a treasury head at a big public sector bank said.
At the end of trade on Tuesday, liquidity in the banking system was in a surplus of 115.59 bln rupees, as against 63.78 bln rupees on Monday, according to Reserve Bank of India data. Liquidity in the banking system bounced back to surplus last week because of the government’s month-end spending of 500-600 bln rupees.
Dealers expect liquidity in the banking system to slip into a deficit again by the end of the week as outflows on account of tax deducted at source and excise duty payments have started.
“We don’t expect any support on liquidity from RBI. I think the liquidity will remain as it is,” said the treasury head quoted earlier.
The RBI’s Monetary Policy Committee is expected to keep the repo rate and policy stance unchanged at the conclusion of its meeting on Friday, according to a poll by Informist. The committee has kept the policy rate unchanged at 6.50% since April, after raising the repo rate by 250 basis points between May 2022 and February.
–Primary market
* Bajaj Finance, Redington India, Tata Cleantech Capital, Axis Finance, and Grasim Industries raised funds through CPs.
* HDFC Bank and Indian Bank raised funds through CDs
–Secondary market
* Small Industries Development Bank of India’s CD maturing on Jan 11 was dealt thrice at a weighted average yield of 7.4498%.
* SIDBI’s CP maturing on Thursday was dealt five times at a weighted average yield of 6.7831%.
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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