Short-Term Debt: CD issuances up as major bks rush to roll-over debt

Informist, Thursday, Dec 28, 2023

By Asmita Patil

MUMBAI – Fundraising through certificates of deposit rose today, at the fag end of Oct-Dec, as banks rushed to roll-over existing debt, dealers said. Banks have raised 36 bln rupees through CDs so far today. None of the banks issued CDs on Wednesday.

Union Bank of India was the biggest issuer of CDs today, raising 20 bln rupees through papers maturing in three months at 7.44%.

Banks are flocking to the short-term debt market as liquidity in the banking system is in a large deficit. At the end of Wednesday, the liquidity deficit in the banking system was 2.62 trln rupees, as against 2.68 trln rupees on Tuesday, according to the RBI data.

Banks have raised more than 1 trln rupees through CDs so far this month. This is the first time CD issuance has crossed this mark in the current financial year. This is despite a 10-basis-point rise in CD rates during December. Rates on CDs remained flat at 7.40-7.60% today.

Rates on three-month CPs issued by non-banking finance companies were flat at 8.00-8.20%. Rates on papers of similar maturity issued by manufacturing companies were also flat at 7.50-7.70%.

After rising sharply on Wednesday, fundraising through commercial papers tumbled today due to lack of big-ticket issuances. So far in the day, companies and financial institutions have raised 3.25 bln rupees through CPs against 93.25 bln rupees on Wednesday.

–Primary market

* Godrej Industries and Poonawalla Fincorp raised funds through CPs.

* Axis Bank, Union Bank of India, and Bank of Baroda raised funds through CDs.

–Secondary market
* National Bank for Agriculture and Rural Development’s CD maturing on Jan 23 was dealt thrice at a weighted average yield of 7.5956%.
* Larsen and Toubro’s CP maturing on Friday was dealt six times at a weighted average yield of 6.8357%.

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:

Certificates of deposit

Commercial papers

Today

Today

24.40

35.8531.4516.10

End

Edited by Vidhi Verma

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to [email protected]

Source: Cogencis