Short-Term Debt: CP issuances rise on large deal by Reliance Retail
Wednesday, Oct 9
By Vishal Sangani
MUMBAI – Fundraising through commercial papers rose sharply today due to a large deal by Reliance Retail Ltd.
So far today, CPs worth 78.50 bln rupees have been issued, against 32.75 bln rupees on Monday. Reliance Retail was the major issuer, raising 35.00 bln rupees through two-month papers at 5.45%, while NTPC Ltd raised 15 bln rupees through CPs maturing on Jan 10 at 5.50%.
Today, the market was dominated by manufacturing companies, which tapped the market to roll over papers set to mature in the coming days, dealers said.
Issuances of CPs by non-banking finance companies have been subdued over the past few weeks due to low credit growth and as they continue to reduce their exposure to CPs for their asset-liability management. Demand for such papers from mutual funds has also been weak.
Indian financial market were closed on Tuesday on account of Dussehra.
However, the sharp rise in issuances did not impact rates because steady inflows into liquid and money market schemes of fund houses led to firm demand. At the same time, subdued issuance of certificates of deposit has forced mutual funds to make higher investments into CPs instead of keeping their funds idle.
Rates on two-month commercial papers issued by manufacturing companies were quoted in a range of 5.40-5.55%, while those on the papers of non-banking finance companies were quoted at 5.60-5.70%.
Rates on two-month certificates of deposit were quoted in a range of 5.25-5.35%.
Systemic liquidity is currently estimated at a surplus of 2.40 trln rupees.
Issuances of CDs continue to remain subdued due to a liquidity surplus in the banking system.
* Reliance Retail, EID Parry, SBI Cards & Payments Services, Grasim Industries, Indian Oil Corp, Ultratech Cement, Power Grid Corp of India, Chennai Petroleum Corp, and NTPC raised funds through CPs today
* Axis Bank’s CD maturing on Jul 24 was dealt six times at a weighted average yield of 6.3001%
* National Bank for Agriculture and Rural Development’s CP maturing on Jun 8 was dealt nine times at a weighted average yield of 6.3000%
Following was the volume at 1645 IST in the secondary market for short-term debt, in bln rupees, as detailed by the Clearing Corp of India’s F-TRAC platform:
Certificates of deposit
NOTE: Details of the deals have been received from market sources
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Mainak Moitra
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