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Short-Term Debt: CD supply tops 100 bln rupees led by Union Bank

Informist, Tuesday, Oct 11, 2022

By Vishal Sangani


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


The issuances shot up also as a few other banks tapped the market for funding needs and because liquidity slipped into deficit, dealers said.


Liquidity in the banking system is currently estimated to be in a deficit of over 87.64 bln rupees against a surplus of 506.18 bln rupees on Monday.


The liquidity slipped into deficit due to payments for government bonds that were auctioned on Friday and sale of dollars by the central bank to support the rupee.


So far today, CDs worth 118.50 bln rupees were issued as against nil on Monday. Union Bank of India raised 80.00 bln rupees in total through papers maturing in December and Jan 2 at 6.40% and 6.69%, respectively.


Banks also tapped the market to meet credit disbursement needs. According to latest data from the Reserve Bank of India, banking system advances were up 16.4% on year at 126.30 trln rupees in the fortnight ended Sep 23.


Large issuances by Housing Development Finance Corp and Bajaj Finance also led to a spike in funds raised through commercial papers.


Companies tapped the market to roll over papers set to mature in the coming days and to meet their funding requirements, dealers said.


So far today, CPs aggregating 87.00 bln rupees were issued, as against 30.00 bln rupees on Monday. HDFC was the major issuer, raising 35 bln rupees through papers maturing on Dec 15 at 6.55%.


Bajaj Finance raised 31 bln rupees through papers maturing in three months at 6.95%.


Rates on short-term debt papers are 40-45 basis points higher in the primary market since last few days, as liquidity in the banking system has shrunk.


Rates on three-month CDs rose to 6.70-6.95% as against 6.50-6.75% on Monday.


Rates on three-month CPs of non-banking finance companies rose to 6.95-7.15% compared with 6.85-7.05% on Monday, while those on papers of manufacturing companies rose by 20 bps to 6.80-7.05%.


Short-term debt rates have also risen in tandem with overnight borrowing costs in the money market. Overnight rates in the tri-party repo segment have climbed towards the RBI’s marginal standing facility rate of 6.15%, which represents the upper bound of the central bank’s policy rate corridor.


–Primary market

* Axis Securities, HDFC, Bajaj Finance, Chambal Fertilisers and Chemicals, Tata Power Co, and Reliance Jio Infocomm raised funds through CPs.

* Indian Bank, IndusInd Bank, Axis Bank and Union Bank of India raised funds through CDs.


–Secondary market

* Canara Bank’s CD maturing on Dec 21 was dealt two times at a weighted average yield of 6.2503%

* Hindustan Petroleum Corp’s CP maturing on Wednesday was dealt twice at a weighted average yield of 6.2374%


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 Ashish Shirke


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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