Informist, Monday, Oct 10, 2022
By Vishal Sangani
MUMBAI – Rates on short-term debt papers such as certificates of deposit and commercial papers rose today as surplus liquidity in the banking system narrowed further, dealers said.
Liquidity in the banking system is currently estimated to be in a surplus of over 404.89 bln rupees as against 742.14 bln rupees on Friday. The surplus has narrowed due to outflows on account of excise duty payments and sale of dollars by the Reserve Bank of India to support the rupee.
Rates on three-month CDs rose to 6.50-6.75% from 6.35-6.55% on Friday.
Rates on three-month CPs of non-banking finance companies rose to 6.85-7.05% from 6.75-6.95% on Friday, and those on papers of manufacturing companies rose 15 basis points to 6.60-6.85%.
Short-term debt rates have also risen in tandem with overnight borrowing costs in the money market. Overnight rates in the tri-party repo segment have climbed towards the RBI’s marginal standing facility rate of 6.15%, which represents the upper bound of the central bank’s policy rate corridor.
On the issuance side, supply of CPs was up as a few companies tapped the market to meet their funding needs and rolled over papers set to mature in the coming days.
So far today, CPs aggregating 30.00 bln rupees were issued, as against 21.00 bln rupees on Friday. Reliance Retail Ventures was the major issuer, raising 23 bln rupees through papers maturing on Jan 2 at 6.75%.
Meanwhile, the number of issuers in the primary short-term debt market remained low as most participants stayed on the sidelines because of a surge in rates.
Owing to higher rates, Chennai Petroleum Corp today scrapped its plan to raise funds through CPs maturing on Nov 18 and Nov 3 as the bid rates were higher than what the company was willing to pay, a dealer said.
On the other hand, banks did not issue any CDs as there is no immediate need for funds.
On Friday, Axis Bank and Punjab & Sind Bank had raised 9.00 bln rupees in total through CDs.
–Primary market
* NLC TamilNadu Power, Reliance Retail Ventures and ICICI Home Finance raised funds through CPs.
–Secondary market
* Axis Bank’s CD maturing on Dec 8 was dealt three times at a weighted average yield of 6.1498%
* LIC Housing Finance’s CP maturing on Tuesday was dealt twice at a weighted average yield of 6.2335%
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 Ashish Shirke
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