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Short-Term Debt: Large deal by HDFC boosts CP volumes, rates flat

Informist, Tuesday, Nov 22, 2022

By Vishal Sangani

 

MUMBAI – A large issuance by Housing Development Finance Corp led to a spike in funds raised through commercial papers today.

 

The housing finance company was the lone issuer, raising 55 bln rupees in total at 7.05% and 7.80% through papers maturing in three months and one-year, respectively. The company tapped the market to meet funding requirements and roll over papers set to mature in the coming days.

 

On Monday, companies had raised 10.75 bln rupees through CPs.

 

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

 

Despite a surge in issuances, rates on short-term debt papers were range-bound because of firm demand from mutual funds, dealers said. Mutual funds have seen continuous inflow into 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.

 

Rates on three-month CPs issued by non-banking finance companies were quoted at 7.10-7.30%, while rates on papers of manufacturing companies were quoted at 6.95-7.15%.

 

Rates on three-month certificates of deposit were quoted at 6.85-7.10%.

 

Issuances of certificates of deposit increased today as Axis Bank and Punjab National Bank tapped the market to meet funding needs and also due to strong growth in credit, dealers said.

 

So far today, CDs aggregating 15.00 bln rupees were issued, against none on Monday. Punjab National Bank raised 9.00 bln rupees through papers maturing in three months at 7.00%.

 

Banks also raised funds due to demand for funds from banks as liquidity is in deficit. Liquidity slipped into deficit due to outflows on account of payments for goods and services tax and government bonds auctioned. Liquidity in the banking system is currently estimated to be in a deficit of 144.17 bln rupees, against a surplus of 579.27 bln rupees on Monday.

 

–Primary market

* Axis Bank and Punjab National Bank raised funds through CDs.

 

–Secondary market

* Punjab National Bank’s CD maturing on Nov 30 was dealt at a weighted average yield of 6.2501%

* Tata Power Co’s CP maturing on Dec 7 was dealt at a weighted average yield of 6.5997%

 

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

9.0011.206.5013.90

 

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 Avishek Dutta

 

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 (22) 6985-4000

Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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