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Short-Term Debt: CP supply rises on steady demand from mutual funds

Informist, Thursday, Nov 3, 2022

By Vishal Sangani

 

MUMBAI – Issuances of commercial papers rose today due to steady demand from mutual funds, dealers said. Mutual funds have seen continuous inflow in liquid funds, which are then deployed in short-term debt papers. They are also reinvesting the funds received from the maturity of short-term papers.

 

So far today, CPs aggregating 43.00 bln rupees were issued, against 6.25 bln rupees on Wednesday. L&T Finance was the major issuer, raising 25 bln rupees through papers maturing on Nov 28 at 6.47%.

 

The supply of papers by big-ticket issuers was readily absorbed because of their low-risk profile.

 

Fund raising through CPs also rose as some companies tapped the market to meet their funding needs and to roll over papers set to mature in the coming days.

 

Rates on short-term debt papers were unchanged today due to lower issuances.

 

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%.

 

Rates on three-month certificates of deposit rose were quoted at 6.95-7.25%.

 

Meanwhile, Canara Bank was the lone issuer of CDs today, raising 20.00 bln rupees at 6.90% through papers maturing in three months. The state-owned lender tapped the market for its funding needs.

 

On Wednesday, CDs worth 2.50 bln rupees were issued.

 

Supply of fresh CDs by other banks were low as there was no immediate need for funds owing to surplus liquidity in the banking system.

 

Liquidity in the banking system is currently estimated to be in a surplus of over 931.64 bln rupees, against 261.41 bln rupees on Wednesday. The surplus widened because of some inflows on account of government spending and as banks’ cash balances with the central bank declined, dealers said.

 

As of Wednesday, banks’ cash balances with the RBI were at 7.59 trln rupees against 8.15 trln rupees on Tuesday.

 

–Primary market

* TV 18 Broadcast, Network 18 Media and Investments, L&T Finance, Reliance Retail Ventures and Axis Finance raised funds through CPs.

 

–Secondary market

* Axis Bank’s CD maturing on Sep 5 was dealt three times at a weighted average yield of 7.5000%

* Reliance Retail Ventures’ CP maturing on Monday was dealt at a weighted average yield of 5.9991%

 

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

13.0012.6513.5029.90

 

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 Tanima Banerjee

 

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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