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Short-Term Debt: CP supply up on demand for funds from PSU cos, NBFCs

Informist, Thursday, Dec 2, 2021


By Vishal Sangani


MUMBAI – Issuances of commercial papers rose today because of fundraising by state-owned companies such as Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp.


These companies tapped the market to meet their funding requirements and rolled over papers set to mature in the coming days.


The amount raised through CPs also surged today because Bajaj Finance Ltd and Aditya Birla Finance raised funds through ultra short-term debt papers to fund initial public offerings.


The non-bank lenders raised around 60 bln rupees in total through ultra-short term CPs at 4.25%.


These CPs were for ultra-short term, issued by non-bank lenders to raise funds for clients subscribing to large initial public offerings of equity shares. Lenders are raising funds for Tega Industries Ltd’s initial public offering.


Usually, fund houses invest in such papers of companies as these offer better yields in a short span of time.


So far today, CPs aggregating 104.00 bln rupees were issued, as against 67.00 bln rupees sold on Wednesday. Bharat Petroleum Corp was the major issuer, raising 15 bln rupees through papers maturing on Dec 29 at 3.43%.


Despite the surge in issuances, rates on short-term debt papers were unchanged today due to steady demand from mutual funds and prevailing surplus liquidity in the banking system, dealers said.


Mutual funds have seen a steady inflow in liquid funds, which are then deployed in short-term debt papers. They are also reinvesting the funds received from the maturity of short-term papers.


Rates on three-month CPs of manufacturing companies quoted at 3.70-3.85%, while those on papers of non-bank finance companies were unchanged at 3.90-4.30%.


Liquidity in the banking system is estimated to be in a surplus of over 8.32 trln rupees, against 7.75 trln rupees on Wednesday. The surplus widened because of month-end spending by the government in the form of salary and pension payments.


Market participants expect rates on short-term debt papers to be range-bound ahead of the outcome of the Reserve Bank of India’s next monetary policy review meet from Dec 6-8.


On the other hand, Bandhan Bank was the lone issuer of certificates of deposit today, raising 1.50 bln rupees through papers maturing in six months, dealers said.


The supply of CDs by state-owned banks in the primary market remained subdued due to prevailing high liquidity in the banking system and low credit offtake.


Rates on three-month CDs were quoted at 3.55-3.70% in the secondary market.


–Primary market

* Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp, Bharat Oman Refineries, Bajaj Finance, Aditya Birla Finance and Reliance Jio Infocomm raised funds through CPs.


–Secondary market

* IDFC First Bank’s CD maturing on Jun 15 was dealt at a weighted average yield of 4.3500%

* NTPC’s CP maturing on Dec 14 was dealt four times at a weighted average yield of 3.3256%


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 Snigdha Kuttikat


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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