Short-Term Debt: NABARD lone CP issuer, rates flat on low supply

Informist, Wednesday, Feb 1, 2023

By Vishal Sangani

MUMBAI – National Bank for Agriculture and Rural Development was the lone issuer of commercial papers today, raising 10.50 bln rupees through papers maturing in three months at 7.24%.

CP supply was low in the primary market due to low market participation. Both issuers and investors remained cautious ahead of the outcome of the Union Budget for 2023-24 (Apr-Mar), dealers said.

Issuances of fresh CPs also remained low due to low requirement of funds and no big-ticket issuances today.

On Tuesday, CPs worth 12.75 bln rupees were issued.

Rates on CPs were steady today because of fewer market participants.

Rates on three-month CPs issued by non-banking finance companies were quoted at 7.50-7.75%, while rates on papers of manufacturing companies were quoted at 7.25-7.45%.

Rates on three-month certificates of deposit were quoted at 7.20-7.45%.

Market participants said rates on short-term debt papers were likely to remain in a narrow range ahead of the Reserve Bank of India’s Monetary Policy Committee meeting next week. The Monetary Policy Committee will detail its rate decision on Feb 8.

Market participants said a repo rate hike of 25 basis points was already priced into the current rates on short-term debt papers.

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

Liquidity in the banking system is currently estimated to be in a surplus of 26.87 bln rupees, against a deficit of 23.64 bln rupees on Tuesday. Liquidity may improve further in the coming days due to inflows on account of the government’s month-end spending in the form of salaries and pension payouts.

–Secondary market

* National Bank for Agriculture and Rural Development’s CD maturing on Feb 8 was dealt at a weighted average yield of 6.5992%

* Housing Development Finance Corp’s CP maturing on Mar 16 was dealt thrice at a weighted average yield of 6.8901%

At 1630 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

13.0035.655.507.22

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

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