Short-Term Debt: CP volumes rise on large deals by IOC, HPCL


Short-Term Debt: CP volumes rise on large deals by IOC, HPCL

Tuesday, Mar 31

By Vishal Sangani


MUMBAI – Amount raised through commercial papers rose today due to large deals by Indian Corp and Hindustan Corp.

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So far today, CPs aggregating 40.00 bln rupees were issued, against 32.50 bln rupees on Monday. Indian Oil Corp and Hindustan Petroleum Corp raised 20.0 bln rupees each through CPs.


Many companies preferred to redeem their papers nearing maturity instead of rolling them over and some stayed on the sideline due to low requirement for funds amid a 21-day nationwide lockdown to contain the spread of coronavirus, dealers said.


Many companies have suspended operations during the lockdown.


The number of coronavirus cases have increased rapidly in India, with the tally at 1,251. The disease has claimed 32 lives so far.


There was no issuance of certificate of deposits by today due to low demand for funds and ample liquidity in the system and low credit off-take.


Liquidity in the banking system is estimated to be in a surplus of 4.85 trln rupees.


With financial markets having taken a severe beating because of concern over the economic impact of the coronavirus pandemic, the RBI has pulled out all stops to infuse liquidity in the banking system, which is already swimming in surplus liquidity.


The central bank has announced long-term repo operations, purchases under open operations and offered 1 trln rupees through two rounds of 16-day repos.


After an advanced policy meeting on Friday, the RBI’s Monetary Policy Committee cut repo rate by 75 basis points to 4.40%, took steps to infuse 3.74 trln rupees into the system.


Apart from the rate cut, RBI announced up to 1-trln-rupee of targeted long-term repo operations.


The central bank has chosen to provide liquidity under these long-term repos to banks, with an aim to ‘target’ this credit freeze in commercial paper and bond markets, despite ample liquidity available with banks. The first such three-year targeted long-term repo for 250 bln rupees was held today, and will be at the prevailing policy rate.


Owing to lower issuances and low demand from mutual funds rates on short-term debt papers were in a narrow range today.


Demand from mutual funds, the largest in the short-term debt market, was low today as they are facing redemption pressure and also they were active in the secondary market in an attempt to churn their debt portfolios a head of the end of the financial year.

Rates on manufacturing companies’ CPs maturing in three months were quoted at 5.00-5.20%, while rates on CDs maturing in three months were quoted in the range of 4.50-4.70%, in the secondary market.

–Primary market
* Indian Oil Corp and Hindustan Petroleum Corp raised funds through CPs.


–Secondary market

* Axis Bank’s CD maturing on May 29 was dealt at a weighted average yield of 4.6498%

* NTPC’s CP maturing on Friday was dealt three times at a weighted average yield of 3.0059%


Following are the volumes at 1700 IST in the secondary market for short-term debt, in bln rupees, as detailed by the Clearing Corp of India’s F-TRAC platform:


Certificates of deposit

Commercial papers






34.50 60.92 55.75


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




IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Arshad Hussain


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