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Short-Term Debt: CP issuances of fincl cos up on demand for funds

Informist, Thursday, Jan 5, 2023

By Vishal Sangani

 

MUMBAI – Issuances of commercial papers increased today as National Bank for Agriculture and Rural Development and Small Industries Development Bank of India tapped the market to meet their funding requirements and to roll over papers that are set to mature in the coming days, dealers said.

 

So far today, CPs aggregating 53.50 bln rupees were issued compared with 50.00 bln rupees issued on Wednesday. SIDBI raised 30.00 bln rupees through papers maturing in April at 6.98%.

 

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

 

However, the number of participants in the primary market was lower because of less number of issuances by manufacturing companies.

 

A few manufacturing companies are redeeming CPs and are instead looking at alternative sources of funds such as working capital loans because large banks with liquidity are offering short-term loans even below the CP rates for select companies.

 

Despite surge in issuances, rates on short-term debt papers were unchanged due to steady demand from mutual funds, dealers said. Mutual funds have seen continuous inflow into liquid funds, which are being 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 7.25-7.55%, and rates on papers of manufacturing companies were quoted at 7.05-7.25%.

 

Rates on three-month certificates of deposit were quoted at 6.90-7.15%.

 

ICICI Bank and Canara Bank raised 10.00 bln rupees in total through certificates of deposit. The banks tapped the market for funding needs and due to strong growth in credit, dealers said.

 

On Wednesday, Canara Bank was the only issuer. It raised 35.00 bln rupees through CDs.

 

Most banks are on the sidelines as there is no immediate need for funds and because of surplus liquidity in the banking system.

 

Liquidity in the banking system is currently estimated to be in a surplus of 1.45 trln rupees, up from 1.34 trln rupees on Wednesday.

 

Liquidity surplus has widened due to inflows on account of the government’s month-end spending, dealers said.

 

–Primary market

* NABARD, Poonawalla Fincorp, and SIDBI raised funds through CPs.

 

–Secondary market

* Indian Bank’s CD maturing on Apr 5 was dealt at a weighted average yield of 7.0401%

* NABARD’s CP maturing on Mar 14 was dealt at a weighted average yield of 6.4901%

 

At 1625 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

11.2524.6012.754.10

 

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 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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Send comments to [email protected]

 

© Informist Media Pvt. Ltd. 2023. All rights reserved.

Source: Cogencis

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