Short-Term Debt:CP volumes plunge in absence of big-ticket issuances

Informist, Thursday, Jun 2, 2022

By Vishal Sangani

MUMBAI – Funds raised through commercial papers plunged today in the absence of big-ticket issuances, dealers said.

Some companies also stayed on the sidelines due to low requirement for funds.

So far today, CPs aggregating 24.00 bln rupees were issued, as against 97.50 bln rupees on Wednesday. Indian Oil Corp was the major issuer, raising 12.00 bln rupees through papers maturing on Aug 18 at 5.15%.

On Wednesday, L&T Finance and Indian Oil Corp had raised 67.50 bln rupees in total through CPs.

Issuances also fell as some market participants were cautious of taking positions before the Monetary Policy Committee meeting next week.

Market participants expect a 35- to 50-basis-point repo rate hike to curb inflation.

Rates on short-term debt papers were flat because of lower issuances and also as there are no major events that could have a significant impact on the market.

Rates on three-month CPs of non-bank finance companies were quoted at 5.40-5.70%, while those on papers of manufacturing companies were quoted at 5.15-5.40%.

Rates on three-month CDs were quoted at 5.05-5.25%.

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

On Wednesday, Indian Bank–the only issuer–had raised 18.50 bln rupees through CDs.

Liquidity in the banking system is currently estimated to be in a surplus of over 3.78 trln rupees as against 3.28 trln rupees on Wednesday.

The surplus is expected to further widen in the coming days on account of the government’s month-end spending in the form of salaries and pension payouts.

–Primary market

* L&T Finance, ONGC Petro additions, Larsen & Toubro, Hindustan Petroleum Corp and Birla Group Holdings raised funds through CPs.

–Secondary market

* HDFC Bank’s CD maturing on Aug 17 was dealt four times at a weighted average yield of 5.1001%

* National Bank for Agriculture and Rural Development’s CP maturing on Friday was dealt at a weighted average yield of 4.1615%

At 1530 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

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12.7018.5019.6515.75

NOTE: Details of the deals have been received from market sources.

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Maheswaran Parameswaran

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Source: Cogencis