Home Commodity Market News Short-Term Debt: CP rates range-bound on subdued issuances

Short-Term Debt: CP rates range-bound on subdued issuances


Informist, Monday, Oct 31, 2022


By Vishal Sangani


MUMBAI – The rates on commercial papers maturing in three months were range-bound today due to subdued issuances of such instruments as companies were unwilling to raise money at the current levels, dealers said.


A few companies which regularly raised capital from the market are keeping away due to a surge in rates. So far in October, rates on short-term debt papers rose by 55-70 basis points in the primary market as liquidity deficit in the banking system widened.


Rates on three-month CPs were quoted at 7.25-7.45%, while those on papers of manufacturing companies were quoted at 7.10-7.35%.


Liquidity in the banking system is currently estimated to be in a deficit of over 600.92 bln rupees, as against 549.19 bln rupees on Friday. Liquidity conditions remain tight due to higher credit demand and an increase in currency in circulation, market participants said.


Today, a few non-banking finance companies tapped the CPs market for their funding needs, dealers said.


So far today, CPs aggregating 8.25 bln rupees were issued, against 10.75 bln rupees on Friday. Can Fin Homes was the major issuer, raising 5.00 bln rupees through papers maturing in three months at 7.30%.


The decline in the supply of CPs was also because some companies chose not to roll over maturing papers due to a surge in rates and a few manufacturing companies moved to bank loans for their funding requirements, dealers said.


Some market participants also remained on the sidelines ahead of uncertainty over the Monetary Policy Committee meeting, with market participants not expecting an unscheduled rate increase. However, any commentary on the pace of growth and inflation at the outcome of the meet will be keenly eyed, dealers said.


The one-day meeting on Thursday will be held under Section 45ZN of the Reserve Bank of India Act, 1934, which pertains to drafting the committee’s report to the government on failure to meet the inflation targeting mandate.


Meanwhile, banks did not issue any certificates of deposit today as there is no immediate need for funds.


Rates on three-month CDs were quoted at 6.85-7.10%, in the secondary market.


–Primary market

* Birla Group Holdings, Aditya Birla Finance and Can Fin Homes raised funds through CPs.


–Secondary market

* HDFC Bank’s CD maturing on Dec 27 was dealt two times at a weighted average yield of 6.6700%

* Jamnagar Utilities and Power’s CP maturing on Nov 30 was dealt three times at a weighted average yield of 6.5995%


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 Vidhi Verma


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