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Short-Term Debt: CP issuances down on lower market participation

Informist, Monday, Jul 25, 2022


By Vishal Sangani


MUMBAI – Fundraising through commercial papers declined today because of lower market participation amid a low requirement for funds, dealers said.


Only two companies tapped the market to raise funds today as against six issuers on Friday.


So far today, CPs aggregating 5.75 bln rupees were issued as against 36.75 bln rupees on Friday.


The volume of funds raised through CPs fell in the absence of big-ticket issuances and lower issuances by manufacturing companies.


Participation was also low because of lack of requirement for funds and a surge in rates.


Rates on short-term debt papers rose by 15-25 basis points last week, tracking the higher cut-off set by the Reserve Bank of India at the Treasury bills auction and as surplus liquidity narrowed further in the banking system.


Liquidity in the banking system is currently estimated to be in a surplus of over 1.24 trln rupees as against 1.28 trln rupees on Friday.


It narrowed due to outflows on account of goods and service tax payments.

Surplus liquidity may narrow further due to outflows on account of payments for government bonds auctioned on Friday, where the government raised 330 bln rupees through the sale of government securities.


Rates on short-term debt papers were in a narrow range today due to lower issuances.


Rates on three-month CPs of non-bank finance companies were quoted at 5.90-6.05%, while those on papers of manufacturing companies were quoted at 5.70-5.90%.


Rates on three-month certificates of deposit were quoted at 5.60-5.85%.


On the other hand, banks did not issue any CDs today as there was no immediate need for funds.


On Friday, Punjab National Bank and Canara Bank raised 66.00 bln rupees in total through CDs.


–Primary market

* Godrej Industries and HDFC Securities raised funds through CPs.


–Secondary market

* HDFC Bank’s CD, maturing on Dec 13, was dealt at a weighted average yield of 5.8900%

* Tata Steel’s CP, maturing on Nov 9, was dealt two times at a weighted average yield of 6.0498%


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


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Source: Cogencis

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