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Friday, October 15, 2021

Short-Term Debt:Large issuances by HDFC boost CP volumes; rates unch

Informist, Thursday, Oct 14, 2021


By Vishal Sangani


MUMBAI – Large issuances by Housing Development Finance Corp Ltd led to a spike in funds raised through commercial papers today.


The housing finance company raised around 40.00 bln rupees through papers maturing in three months and one year at 3.55% and 4.39%, respectively.


Few state-owned companies also tapped the market to roll over papers that were set to mature in the coming days.


So far today, CPs aggregating 57.00 bln rupees were issued, as against 22.45 bln rupees on Wednesday.


However, participation was low due to few rollovers in the primary market and also due to a truncated week. Indian financial markets will be shut on Friday on account of Dussehra.


Despite a sharp surge in issuances, rates on CPs remained unchanged due to steady demand from mutual funds and liquidity surplus in the banking system.


Demand from mutual funds was steady as they are witnessing steady inflows through liquid funds, which they have been deploying in such papers. Also, they are reinvesting the funds received from the maturity of short-term securities.


Rates on three-month CPs of manufacturing companies were quoted at 3.50-3.70%, while those of non-bank finance companies were quoted at 3.70-3.95%.


Liquidity in the banking system is estimated to be in a surplus of over 7.64 trln rupees.


Rates on CPs are expected to remain in range bound in the coming days as there are no major events that could significantly impact rates, dealers said.


No certificates of deposit were issued by banks today. Issuance of CDs has been particularly scarce as there is surplus liquidity in the banking system. With growth in bank deposits consistently outpacing credit growth, banks have had little reason to tap the short-term debt market.


Loan growth remained muted due to lack of demand for big-ticket loans from corporates and as banks remained 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

* Bharat Oman Refineries, Indian Oil Corp and Housing Development Finance Corp raised funds through CPs.


–Secondary market

* Axis Bank’s CD maturing on Jan 31 was dealt at a weighted average yield of 3.5301%

* Reliance Jio Infocomm’s CP maturing on Nov 10 was dealt five times at a weighted average yield of 3.3953%


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 Aditya Sakorkar


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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