Informist, Wednesday, Jan 31, 2024
By Abhinaba Saha
MUMBAI – After surging on Tuesday, fundraising through short-term debt instruments fell today as issuers exercised caution ahead of the Interim Budget for 2024-25 (Apr-Mar) on Thursday and the outcome of the US Federal Open Market Committee’s meeting after midnight tonight, dealers said.
“Most issuers are open to add (quantum) to yesterday’s (Tuesday’s) issues. But not many deals have closed yet. It’s the last day of the month and the Budget is there tomorrow. Hence, the market is calm,” a dealer at a small brokerage house said.
For the Interim Budget on Thursday, market participants are keenly waiting for the government’s gross borrowing number for 2024-25. According to a median of 23 analysts’ estimates in an Informist poll, the Centre is likely to announce gross borrowing of 15.20 trln rupees through dated securities for 2024-25, against 15.43 trln rupees in 2023-24. The net supply for 2024-25 is seen at 11.65 trln rupees, against 11.81 trln rupees in the current financial year.
“If RBI switches bonds maturing in 2024-25, that could potentially bring the gross borrowing number below 15 trln rupees. That would be really positive for the market,” a fixed income head at a large mutual fund house said.
So far today, companies and financial institutions raised around 7.25 bln rupees through commercial papers, against 102 bln rupees raised on Tuesday.
Maithon Power raised 2.5 bln rupees through CPs maturing at the end of April at a coupon of 8.50%. On Tuesday, National Bank for Agriculture and Rural Development and Small Industries Development Bank of India were the largest issuers, raising a total of 80 bln rupees through CPs maturing in three months.
The certificates of deposit market also witnessed weak supply, with Punjab National Bank being the only issuer of CDs today. The state-owned bank raised 8 bln rupees through CDs maturing in early June at a coupon of 7.80%. On Tuesday, a total of over 59 bln rupees was raised through CDs, with Bank of Baroda being the largest issuer, raising 30 bln rupees.
Caution ahead of the Interim Budget on Thursday also kept the volume low in the secondary market. Deals worth only 18 bln rupees were recorded in CPs on the F-TRAC platform, compared with 30.35 bln rupees on Tuesday, according to data from Clearing Corp of India.
Overall, rates on three-month commercial papers issued by non-banking finance companies were flat at 8.50-8.70% today. Rates on papers of similar maturity issued by manufacturing companies were also steady at 7.90-8.10%. Rates on three-month certificates of deposit were at 7.80-8.00%.
–Primary market
* Maithon Power, Godrej Industries, Bajaj Finance and Tata Realty and Infrastructure raised funds through CPs
* Punjab National Bank raised funds through CDs.
–Secondary market
* Canara Bank’s CD maturing on Thursday was dealt 7 times at a weighted average yield of 6.7749%.
* The Tata Power Co’s CP maturing on Thursday was dealt once at a weighted average yield of 6.7903%.
At 1700 IST, the 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:
End
Edited by Avishek Dutta
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