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Tuesday, August 16, 2022

Short-Term Debt: Large issuances by NFL, RIL boost CP volumes

Informist, Tuesday, Oct 5, 2021

By Vishal Sangani


MUMBAI – Large issuances by National Fertilizers Ltd and Reliance Industries Ltd led to a spike in funds raised through commercial papers today.


Also, a few companies tapped the market to roll over papers set to mature in the coming days and to meet the fresh requirements for funds.


So far today, CPs aggregating 36.75 bln rupees were issued, as against 20.00 bln rupees sold on Monday. Reliance Industries was the major issuer, raising 20.00 bln rupees through papers maturing in Dec-end at 3.55%.


The supply of papers by these big-ticket issuers was readily absorbed because of their low risk profile.


Rates on short-term debt papers remain steady due to prevailing surplus liquidity in the banking system, dealers said. 


Rates on three-month CPs of manufacturing companies were quoted at 3.55-3.70%, and those on papers of non-bank finance companies were unchanged at 3.85-4.05%.


Liquidity in the banking system is estimated to be in a surplus of over 8.46 trln rupees.


The RBI today conducted a seven-day variable rate reverse repo auction, which saw banks park 2.00 trln rupees, the entire notified amount. The RBI set a cutoff of 3.61%, as against the last week’s cutoff of 3.99%.


Rates on CPs are likely to be steady ahead of the Reserve Bank of India’s Monetary Policy Committee meeting starting Wednesday.


While most traders expect the MPC to keep policy rates unchanged and keep an accommodative stance, certain sections of the market believe the central bank will hike the reverse repo rate, which has been the operative policy rate due to excess liquidity in the banking system.


On other hand, some expect the central bank to extend the duration of its variable rate reverse repo operations to up to 56 days from three, four, seven and 14 days at present.


On the other hand, banks did not issue any certificate of deposit today, as there is no immediate need for funds owing to high surplus liquidity in the banking system and low credit growth.


Loan growth remained muted due to lack of demand for big-ticket loans from corporates and as banks remain cautious in anticipation of rising asset quality stress due to the COVID-19 pandemic.


Rates on three-month CDs were quoted at 3.40-3.55%, in the secondary market.


–Primary market

* Godrej Industries, ONGC Petro additions, National Fertilizers and Reliance Industries raised funds through CPs.


–Secondary market

* Axis Bank’s CD maturing on May 11 was dealt five times at a weighted average yield of 3.9500%

* Indian Oil Corp’s CP maturing on Oct 11 was dealt two times at a weighted average yield of 3.3294%


Following are volumes at 1530 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

Commercial papers






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 Pranav S. Joshi


Cogencis news is now Informist. 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.


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Source: Cogencis

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