Informist, Wednesday, Sep 7, 2022
By Vishal Sangani
MUMBAI – The rates on three-month commercial papers declined by five basis points because of steady demand from mutual funds.
Mutual funds have seen continuous inflows into liquid funds, which are then deployed in short-term debt papers. They are also reinvesting the funds received from the maturity of short-term papers.
The rates on three-month CPs of non-bank finance companies were down at 6.15-6.30% as against 6.20-6.35% on Tuesday, and those on papers of manufacturing companies fell to 5.90-6.10% compared with 5.95-6.15% at the previous close.
As the market is not seeing too many issuances of certificates of deposit, investors are parking funds in CPs instead of keeping them idle, said market participants.
On the supply side, issuances of CPs fell today as companies stayed on the sidelines due to low requirement for funds. They have already rolled over papers set to mature in the next few days.
The volume of funds raised through CPs also fell in the absence of big-ticket issuances.
So far today, CPs aggregating 11.25 bln rupees were issued, as against 43.25 bln rupees on Tuesday. Chambal Fertilisers and Chemicals was the major issuer, raising 8.00 bln rupees through papers maturing at the end of November at 6.03%.
A few companies tapped the market to meet their funding needs and to roll over papers set to mature in the coming days, dealers said.
Meanwhile, Punjab National Bank was the lone issuer of CDs today, raising 7.00 bln rupees at 6.85% through papers maturing in one year. The state-owned lender tapped the market for its funding needs, dealers said.
On Tuesday, IndusInd Bank was the only issuer and had raised 1.00 bln rupees through CDs.
Market participants said supply of CDs may increase in the coming days as banks will raise funds due to a pick up in credit demand and also for quarter-end funding requirements.
Typically, fundraising by banks rises towards the end of every quarter to meet quarter-end requirements and boost balance sheets.
The rates on three-month CDs were quoted at 5.85-6.10%.
–Primary market
* Aditya Birla Finance, National Fertilizers and Chambal Fertilisers and Chemicals raised funds through CPs.
–Secondary market
* Punjab National Bank’s CD maturing on Oct 3 was dealt three times at the weighted average yield of 5.5839%
* Housing Development Finance Corp’s CP maturing on Sep 16 was dealt four times at a weighted average yield of 5.4011%
At 1530 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:
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 Michael Correya
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