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Short-Term Debt:CP, CD rates up as surplus liquidity narrows further

Informist, Friday, Jul 22, 2022


By Vishal Sangani


MUMBAI – Rates on short-term debt papers such as commercial papers and certificates of deposit increased today as surplus liquidity narrowed further in the banking system, dealers said.


Liquidity in the banking system is currently estimated to be in a surplus of over 1.28 trln rupees as against 1.55 trln rupees on Thursday.


The surplus liquidity has narrowed due to outflows on account of goods and service tax payments.


The surplus liquidity may narrow further due to outflows on account of payments for government bonds auctioned today. The government raised 330 bln rupees through the sale of government securities.


Rates on three-month CPs of non-bank finance companies were at 5.90-6.05% as against 5.80-6.00% on Thursday, while those on papers of manufacturing companies increased to 5.70-5.90% from 5.60-5.80% at the previous close.


Rates on three-month CDs rose to 5.60-5.85% as against 5.45-5.70% on Thursday.


Rates have also gone up tracking the higher cut-off set by the Reserve Bank of India at the Treasury bills auction. On Wednesday, the cut-off yield at the auction for 91-day Treasury bills was set at 5.3987% as against 5.2401% on Jul 13.


Usually, short-term debt papers are issued at a premium over the yield of Treasury bills.


Issuances of CDs surged today as Punjab National Bank and Canara Bank tapped the market for their funding needs and also as surplus liquidity narrowed in the banking system, dealers said.


So far, CDs around 66.00 bln rupees were issued as against nil on Thursday. Punjab National Bank was the major issuer, raising 50.00 bln rupees in total through papers maturing on Oct 10 and Oct 3 at 5.62% and 5.60%, respectively.


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


Issuances of CPs rose today as some companies tapped the market to meet their funding needs and also to roll over papers set to mature in the coming days, dealers said.


A large issuance by Reliance Retail Ventures Ltd also led to a spike in funds raised through commercial papers today.


So far today, CPs aggregating 36.75 bln rupees were issued, as against 25.50 bln rupees on Thursday. Reliance Retail Ventures raised 21.00 bln rupees through papers maturing in three months at 5.75%.


–Primary market

* NLC TamilNadu Power, Aditya Birla Finance, Redington India, Godrej Industries, Reliance Retail Ventures and Tata Capital Housing Finance raised funds through CPs.


–Secondary market

* HDFC Bank’s CD maturing on Dec 27 was dealt at a weighted average yield of 5.7501%

* Larsen & Toubro’s CP maturing on Sep 30 was dealt at a weighted average yield of 5.5001%


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







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 Namrata Rao


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.


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Source: Cogencis

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