Informist, Wednesday, Jul 27, 2022
By Vishal Sangani
MUMBAI – Commercial paper issuances crossed the 100-bln-rupee mark today, primarily because of large deals by Small Industries Development Bank of India and Reliance Jio Infocomm.
Some companies also tapped the market to meet their funding requirements and rolled over papers set to mature in the coming days.
So far today, CPs aggregating 131.25 bln rupees were issued, against 41.00 bln rupees on Tuesday. Reliance Jio raised 44.50 bln rupees through papers maturing in three months at 5.88%.
SIDBI raised 40.00 bln rupees by issuing papers maturing on Oct 21 at 5.83%.
The supply of papers by big-ticket issuers was readily absorbed because of their low risk profile.
Rates on short-term debt papers rose as surplus liquidity narrowed further in the banking system, dealers said.
Since last week, rates on short-term debt papers have risen 35-45 basis points in the primary market because of higher money market rates and as surplus liquidity has narrowed sharply, dealers said.
Liquidity in the banking system is currently estimated to be in a surplus of over 498.77 bln rupees against 737.41 bln rupees on Tuesday. The surplus liquidity is the lowest since September 2019.
The surplus liquidity may narrow further due to outflows on account of payments for state bonds auctioned on Tuesday. States raised 186.50 bln rupees through sale of securities.
Rates on three-month CPs of non-bank finance companies rose to 6.10-6.25% form 6.00-6.15% on Tuesday, and those on papers of manufacturing companies were higher at 5.90-6.10% compared with the pervious close of 5.85-6.05%.
Rates on three-month certificates of deposit rose to 5.80-6.05% from 5.75-6.00% on Tuesday.
Some dealers said rates on short-term debt papers are likely to rise in the coming days, tracking the higher cutoff set by the Reserve Bank of India at the Treasury bill auction.
Today, the cut-off yield at the auction for 91-day Treasury bills was set at 5.6229% as against 5.3987% on Jul 20.
Usually, short-term debt papers are issued at a premium over the yield of Treasury bills.
Punjab National Bank was the lone issuer of CDs today. The state-owned bank raised 10.00 bln rupees at 5.83% through papers maturing on Oct 21. The bank tapped the market for its funding needs and because surplus liquidity has narrowed, dealers said.
–Primary market
* Larsen & Toubro, SIDBI, Reliance Retail Ventures, Reliance Jio, Godrej Industries and GIC Housing Finance raised funds through CPs.
–Secondary market
* Axis Bank’s CD maturing on Aug 11 was dealt seven times at a weighted average yield of 5.6409%
* Hindustan Petroleum Corp’s CP maturing on Aug 2 was dealt twice at a weighted average yield of 5.5500%
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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