Short-Term Debt: CP issuances tad down; market watchful of liquidity

Informist, Wednesday, Sep 20, 2023

By Asmita Patil

MUMBAI – Fundraising through commercial papers fell slightly today amid deficit liquidity in the banking system, dealers said. 

So far today, companies and financial institutions have raised 15 bln rupees though CPs, compared to 15.25 bln rupees on Monday. Larsen & Toubro was the largest issuer of CPs, raising 10 bln rupees through papers maturing in three months at 7.06%.

“Liquidity deficit was factored into the current rate and the condition is expected to improve next week, so the rates have been flat,” a dealer with a mid-sized brokerage said.

At the end of trade on Monday, liquidity in the system was estimated to be in a deficit of 1.47 trln rupees, widening from a 675.77-bln-rupee deficit on Sunday. The deficit was the highest since April 2019.

Bank borrowing through the Reserve Bank of India’s marginal standing facility touched record high of 1.97 trln rupees on Monday, owing to widening deficit in banking system liquidity.

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%.

No issuances of CDs were reported so far today. On Monday, Bank of Baroda had raised 30 bln rupees though CDs maturing in three months at 7.02%.

–Primary market 

* Larsen & Toubro and Kotak Securities raised funds through CPs

–Secondary market

* HDFC Bank’s CD maturing on Dec 14 was dealt five times at a weighted average yield of 7.0302%.

* Export Import Bank of India’s CP maturing on Mar 22 was dealt thrice at a weighted average yield of 7.1700%.

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

Today

Previous

Today

Previous

30.30

27.70

24.50

32.05

NOTE: Details of the deals have been received from market sources.

End

Edited by Avishek Dutta

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