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Short-Term Debt: CD, CP issuances nil on lower market participation

Informist, Friday, Oct 21, 2022

 

By Vishal Sangani

 

MUMBAI – Banks and companies did not issue any certificates of deposit and commercial papers today in the primary market as market participants avoided placing large bets ahead of a curtailed week for Diwali, dealers said.

 

Domestic financial markets are closed on Monday and Wednesday on account of Diwali festival.

 

On Thursday, Larsen & Toubro Ltd, the lone issuer, had raised 8 bln rupees through CPs.

 

Issuances of fresh short-term debt papers also remained subdued due to low requirement for funds, dealers said.

 

A few companies which raised capital regularly from the market are keeping away due to a surge in rates. Rates on short-term debt papers are 60-55 basis points higher in the primary market since last week, as liquidity in the banking system has shrunk.

 

Market participants said issuers are in wait-and-watch mode. Only companies in need of money are tapping the market and others may like to wait for some more time for the market to settle down.

 

Rates on short-term debt papers were flat because of no issuances in the primary market, dealers said.

 

Rates on three-month CPs were quoted at 7.10-7.30%, while those on papers of manufacturing companies were quoted at 6.95-7.20%.

 

Rates on three-month CDs were quoted at 6.85-7.10%.

 

Issuances of CDs may rise in the coming days as the demand for loans is expected to continue with the ongoing festival season and with liquidity in deficit.

 

Liquidity in the banking system is currently estimated to be in a deficit of over 138.88 bln rupees, as against a surplus of a 64.37 bln rupees on Thursday.

The liquidity deficit may widen due to outflows for goods and services tax payments and dollar sales by the Reserve Bank of India to support the rupee. Liquidity will tighten due to higher credit demand and an increase in currency in circulation during the festival season, market participants said. 

 

–Secondary market

* Axis Bank’s CD maturing on Nov 11 was dealt four times at a weighted average yield of 6.5925%

* Indian Oil Corp’s CP maturing on Tuesday was dealt at a weighted average yield of 6.2001%

 

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

18.2516.7020.8581.05

 

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

 

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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