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Short-Term Debt: CD issuances top 100 bln rupees; SBI major issuer

Informist, Tuesday, Jul 19, 2022

 

By Vishal Sangani

 

MUMBAI – Issuances of certificates of deposit crossed the 100-bln-rupee mark today, primarily because of large deals by the State Bank of India.

 

So far today, CDs aggregating 122.00 bln rupees were issued, as against 24.00 bln rupees on Monday. The SBI has raised 100.00 bln rupees through papers maturing on Oct 3 at 5.39%.

 

The last time SBI tapped the CD market was in March. In February, the lender had tapped the short-term debt market for the first time in a decade, according to data compiled by Informist.

 

A few banks tapped the market for their funding needs and surplus liquidity also narrowed, dealers said.

 

Liquidity in the banking system is currently estimated to be in a surplus of over 1.70 trln rupees as against 2.14 trln rupees on Monday. Surplus liquidity in the banking system is the lowest since October 2019.

 

Surplus liquidity has narrowed due to payments for auctioned government bonds.

 

The surplus is expected to narrow further in the coming days due to outflows on account of goods and service tax payments.

 

Banks also raised funds as demand for credit picked up due to a rise in small-ticket loans, an increase in working capital loans, and a growth in retail loans.

 

As per the data from the Reserve Bank of India, the on-year growth in advances of Indian banks rose to a 34-month high of 13.29% in the fortnight to Jul 1 and advances rose by 2.31 trln rupees to 123.81 trln rupees. Banks’ advances had grown 12.06% on year in the previous fortnight.

 

Rates on CDs rose by five basis points due to a surge in issuances of such papers.

 

Rates on three-month CDs were up at 5.40-5.65% as against 5.35-5.60% on Monday.

 

Meanwhile, funds raised through commercial papers fell in the absence of big-ticket issuances today, dealers said.

 

So far today, CPs aggregating 13.50 bln rupees were issued, as against 52.00 bln rupees on Monday. Bajaj Finance was the major issuer, raising 10.00 bln rupees through papers maturing in three months at 5.65%.

 

On Monday, the National Bank for Agriculture and Rural Development had raised 41.50 bln rupees through CPs.

 

Hindustan Petroleum Corp today scrapped its plan to raise funds through 44-day paper as the bid rates they received were higher than what the company was willing to pay, a dealer said.

 

Rates on CPs were range-bound today due to lower issuances.

 

Rates on three-month CPs of non-bank finance companies were quoted at 5.70-5.90%, while those on papers of manufacturing companies were quoted at 5.50-5.70%.

 

–Primary market

* Tata Capital Financial Services, Bajaj Finance and Tata Motors Finance raised funds through CPs.

* Canara Bank, IDFC First Bank and State Bank of India raised funds through CDs.

 

–Secondary market

* Canara Bank’s CD maturing on Oct 3 was dealt at a weighted average yield of 5.4099%

* Housing Development Finance Corp’s CP maturing on Wednesday was dealt five times at a weighted average yield of 4.8917%

 

At 1530 IST, 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

Previous

Today

Previous

8.756.4511.0516.75

 

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 Vidhi Verma

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. 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.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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