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Monday, October 2, 2023

Short-Term Debt: CP issuances up amid deficit liquidity conditions

Informist, Monday, Sep 18, 2023


By Asmita Patil

MUMBAI – Fundraising through commercial papers rose slightly today, as banking system liquidity slipped into a deficit, dealers said.


So far today, companies and financial institutions have raised 15.25 bln rupees through CPs. On Friday, no company had raised funds through CPs.


Most issuers remained on the sidelines ahead of a scheduled holiday on Tuesday, dealers said. Domestic financial markets will be closed on Tuesday for Ganesh Chaturthi.


“Liquidity has slipped into deficit, and advance tax outflows are also scheduled this week, so issuers will wait and watch till Wednesday,” a dealer with a mid-sized brokerage said.


At the end of trade on Friday, liquidity in the system was estimated to be in a deficit of 457.00 bln rupees, against a 26.96-bln-rupee surplus on Thursday.


This was the first time since Aug 24 that liquidity had gone into deficit, with payments for advance tax likely to draw nearly 1 trln rupees out of the banking system.


Rates on short-term papers remained largely steady today as the fall in liquidity was already factored into current rates, dealers said. Rates on three-month CPs issued by non-banking financial companies were quoted at 7.30-7.50%. Rates on papers of manufacturing companies were at 7.10-7.30%.


Rates on three-month certificates of deposit were quoted at 7.05-7.25%. Bank of Baroda raised 30 bln rupees though CDs maturing in three months at a rate of 7.02%.


–Primary market 

* Bajaj Finance, Small Industries Development Bank of India, Godrej Industries, and Redington India raised funds through CPs

* Bank of Baroda raised funds through CDs


–Secondary market

* Indian Bank’s CD maturing on Wednesday was dealt four times at a weighted average yield of 6.8463%.

* SIDBI’s CP maturing on Wednesday was dealt thrice at a weighted average yield of 7.2173%.


At 1700 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.




Edited by Rajeev Pai


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Source: Cogencis

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