Informist, Tuesday, Feb 7, 2023
By Vishal Sangani
MUMBAI – The gross amount raised in January through commercial papers declined 19.7% from a month ago as redemptions were lesser during the month, which meant lower need for funds to roll over the maturing debt by companies.
CP redemptions were lower at 922.04 bln rupees in January compared with 1.17 trln rupees in December, according to data compiled by Informist.
Around 965.08 bln rupees was raised through CPs last month, as against 1.20 trln rupees in December, and 1.25 trln rupees in January 2022.
In January, 118 companies issued CPs compared with 131 companies in December.
Of the CPs worth 922.04 bln rupees that were scheduled for redemption in January, papers worth 272.53 bln rupees were not rolled over. Net redemptions worth 169.30 bln rupees comprised papers issued by Bajaj Housing Finance, Export Import Bank of India, Hindustan Petroleum Corp, Indian Oil Corp, Jamnagar Utilities and Power, Larsen and Toubro and Reliance Retail Ventures.
The overall quantum of CP issuances fell also because manufacturing companies refrained from raising short-term debt due to rise in cost of borrowing. Instead, they took recourse to alternate sources of funds, such as working capital loans from banks.
Short-term debt issuances by manufacturing companies in January fell 32% from a month ago as rates on such papers rose by 20 basis points. Large banks with surplus liquidity have been offering lucrative short-term loans to select companies at rates lower than those on CPs.
The spread between rates on three-month CPs by manufacturing companies and State Bank of India's one-year marginal cost of funds-based lending rate shrank to 115 bps in January from 125 bps in December.
Bank credit growth to industries rose to 8.7% on year in December, primarily due to higher credit to large and medium industries, as per RBI data.
Non-banking finance companies raised 537.57 bln rupees through CPs in January, marginally lower than 541.72 bln rupees the previous month.
At 156 bln rupees, National Bank for Agriculture and Rural Development emerged as the top issuer of CPs in January, followed by Reliance Jio Infocomm with issuances worth 60.10 bln rupees. Other major issuers included Small Industries Development Bank of India, Housing Development Finance Corp, Hindustan Zinc and Panatone Finvest.
In spite of fall in issuances, rates on CPs rose by 20-30 bps last month because liquidity surplus shrank and yields on Treasury bills rose.
On Jan 31, liquidity in the banking system was estimated to be in a surplus of 26.87 bln rupees, down from 643.19 bln rupees on Jan 1.
Rates on three-month CPs issued by manufacturing companies were at 7.25-7.45% as on Jan 31, against 7.05-7.25% at the end of the previous month. Non-banking finance companies issued three-month CPs at 7.50-7.70%, up from 7.20-7.40% a month ago.
Yield on the 91-day T-bill, against which corporate short-term borrowings are benchmarked, rose 16 bps to close at 6.47% in January.
Usually, short-term debt papers are issued at a premium over the yield of treasury bills.
CERTIFICATES OF DEPOSIT
Fundraising through certificates of deposit fell 22.6% on month in January because of a cyclical fall in demand for funds from banks at the beginning of the financial quarter.
CDs worth 600.07 bln rupees were issued in January, against 775.07 bln rupees in December. Banks had raised 221.75 bln rupees through CDs in January 2022.
Typically, CD issuances tend to ease off after heavy borrowing by banks at the end of each quarter, when banks step up short-term loans to customers. This quarter-end rush leads to bulking up of a lender's book, enabling banks to show higher growth and improvement in ratios such as non-performing assets at the end of the quarter.
Fundraising through CDs by state-owned banks fell by 34.3% on month to 285.45 bln rupees in January, although these banks were still the top issuers of CDs last month, accounting for about 48% of the total issuances.
Private banks borrowed 203.62 bln rupees through CDs in January, down from 320.32 bln rupees in December.
Banks continued to depend on the short-term debt market to meet the robust demand for credit. According to latest RBI data, advances by banks rose 16.5% on year to 132.8 trln rupees in the fortnight ended Jan 13. Deposits continued to lag credit growth, growing 10.58% on year to 176.74 trln rupees.
"The credit growth has continued to be in double digits and has been broad-based across the segments and is likely to remain strong in 2022-23 (Apr-Mar)," CareEdge said in a report.
Some lenders also tapped the short-term debt market in January to roll over papers that were set to mature.
Among state-owned banks, Canara Bank topped the list of CD issuers, raising 156 bln rupees during the month. It was followed by Union Bank of India with issuances worth 69 bln rupees.
Among private sector banks, Axis Bank was the largest issuer, raising 54.62 bln rupees.
Rates on three-month CDs were at 7.20-7.45 as on Jan 31, up from 6.90-7.15% a month ago.
Details of CPs and CDs issued in January, amount in bln rupees:
| CPs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| Housing finance companies | 88.35 | 159.65 | (-)44.66 | 97.99 | (-)9.84 |
| Non-banking finance companies | 537.57 | 541.72 | (-)0.77 | 556.29 | (-)3.37 |
| Manufacturing companies | 339.16 | 499.46 | (-)32.09 | 592.04 | (-)42.71 |
| REIT | -- | 1.00 | (-)100.00 | -- | -- |
| Total(I) | 965.08 | 1,201.83 | (-)19.70 | 1,246.32 | (-)22.57 |
| CDs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| State-owned banks | 285.45 | 434.75 | (-)34.34 | 13.00 | 2,095.77 |
| Private banks | 203.62 | 320.32 | (-)36.43 | 164.75 | 23.59 |
| Other financial institutions | 111.00 | 20.00 | 455.00 | 44.00 | 152.27 |
| Total | 600.07 | 775.07 | (-)22.58 | 221.75 | 170.61 |
End
Edited by Aditya Sakorkar
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Informist, Tuesday, Feb 7, 2023
By Vishal Sangani
MUMBAI – The gross amount raised in January through commercial papers declined 19.7% from a month ago as redemptions were lesser during the month, which meant lower need for funds to roll over the maturing debt by companies.
CP redemptions were lower at 922.04 bln rupees in January compared with 1.17 trln rupees in December, according to data compiled by Informist.
Around 965.08 bln rupees was raised through CPs last month, as against 1.20 trln rupees in December, and 1.25 trln rupees in January 2022.
In January, 118 companies issued CPs compared with 131 companies in December.
Of the CPs worth 922.04 bln rupees that were scheduled for redemption in January, papers worth 272.53 bln rupees were not rolled over. Net redemptions worth 169.30 bln rupees comprised papers issued by Bajaj Housing Finance, Export Import Bank of India, Hindustan Petroleum Corp, Indian Oil Corp, Jamnagar Utilities and Power, Larsen and Toubro and Reliance Retail Ventures.
The overall quantum of CP issuances fell also because manufacturing companies refrained from raising short-term debt due to rise in cost of borrowing. Instead, they took recourse to alternate sources of funds, such as working capital loans from banks.
Short-term debt issuances by manufacturing companies in January fell 32% from a month ago as rates on such papers rose by 20 basis points. Large banks with surplus liquidity have been offering lucrative short-term loans to select companies at rates lower than those on CPs.
The spread between rates on three-month CPs by manufacturing companies and State Bank of India's one-year marginal cost of funds-based lending rate shrank to 115 bps in January from 125 bps in December.
Bank credit growth to industries rose to 8.7% on year in December, primarily due to higher credit to large and medium industries, as per RBI data.
Non-banking finance companies raised 537.57 bln rupees through CPs in January, marginally lower than 541.72 bln rupees the previous month.
At 156 bln rupees, National Bank for Agriculture and Rural Development emerged as the top issuer of CPs in January, followed by Reliance Jio Infocomm with issuances worth 60.10 bln rupees. Other major issuers included Small Industries Development Bank of India, Housing Development Finance Corp, Hindustan Zinc and Panatone Finvest.
In spite of fall in issuances, rates on CPs rose by 20-30 bps last month because liquidity surplus shrank and yields on Treasury bills rose.
On Jan 31, liquidity in the banking system was estimated to be in a surplus of 26.87 bln rupees, down from 643.19 bln rupees on Jan 1.
Rates on three-month CPs issued by manufacturing companies were at 7.25-7.45% as on Jan 31, against 7.05-7.25% at the end of the previous month. Non-banking finance companies issued three-month CPs at 7.50-7.70%, up from 7.20-7.40% a month ago.
Yield on the 91-day T-bill, against which corporate short-term borrowings are benchmarked, rose 16 bps to close at 6.47% in January.
Usually, short-term debt papers are issued at a premium over the yield of treasury bills.
CERTIFICATES OF DEPOSIT
Fundraising through certificates of deposit fell 22.6% on month in January because of a cyclical fall in demand for funds from banks at the beginning of the financial quarter.
CDs worth 600.07 bln rupees were issued in January, against 775.07 bln rupees in December. Banks had raised 221.75 bln rupees through CDs in January 2022.
Typically, CD issuances tend to ease off after heavy borrowing by banks at the end of each quarter, when banks step up short-term loans to customers. This quarter-end rush leads to bulking up of a lender's book, enabling banks to show higher growth and improvement in ratios such as non-performing assets at the end of the quarter.
Fundraising through CDs by state-owned banks fell by 34.3% on month to 285.45 bln rupees in January, although these banks were still the top issuers of CDs last month, accounting for about 48% of the total issuances.
Private banks borrowed 203.62 bln rupees through CDs in January, down from 320.32 bln rupees in December.
Banks continued to depend on the short-term debt market to meet the robust demand for credit. According to latest RBI data, advances by banks rose 16.5% on year to 132.8 trln rupees in the fortnight ended Jan 13. Deposits continued to lag credit growth, growing 10.58% on year to 176.74 trln rupees.
"The credit growth has continued to be in double digits and has been broad-based across the segments and is likely to remain strong in 2022-23 (Apr-Mar)," CareEdge said in a report.
Some lenders also tapped the short-term debt market in January to roll over papers that were set to mature.
Among state-owned banks, Canara Bank topped the list of CD issuers, raising 156 bln rupees during the month. It was followed by Union Bank of India with issuances worth 69 bln rupees.
Among private sector banks, Axis Bank was the largest issuer, raising 54.62 bln rupees.
Rates on three-month CDs were at 7.20-7.45 as on Jan 31, up from 6.90-7.15% a month ago.
Details of CPs and CDs issued in January, amount in bln rupees:
| CPs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| Housing finance companies | 88.35 | 159.65 | (-)44.66 | 97.99 | (-)9.84 |
| Non-banking finance companies | 537.57 | 541.72 | (-)0.77 | 556.29 | (-)3.37 |
| Manufacturing companies | 339.16 | 499.46 | (-)32.09 | 592.04 | (-)42.71 |
| REIT | -- | 1.00 | (-)100.00 | -- | -- |
| Total(I) | 965.08 | 1,201.83 | (-)19.70 | 1,246.32 | (-)22.57 |
| CDs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| State-owned banks | 285.45 | 434.75 | (-)34.34 | 13.00 | 2,095.77 |
| Private banks | 203.62 | 320.32 | (-)36.43 | 164.75 | 23.59 |
| Other financial institutions | 111.00 | 20.00 | 455.00 | 44.00 | 152.27 |
| Total | 600.07 | 775.07 | (-)22.58 | 221.75 | 170.61 |
End
Edited by Aditya Sakorkar
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Informist, Tuesday, Feb 7, 2023
By Vishal Sangani
MUMBAI – The gross amount raised in January through commercial papers declined 19.7% from a month ago as redemptions were lesser during the month, which meant lower need for funds to roll over the maturing debt by companies.
CP redemptions were lower at 922.04 bln rupees in January compared with 1.17 trln rupees in December, according to data compiled by Informist.
Around 965.08 bln rupees was raised through CPs last month, as against 1.20 trln rupees in December, and 1.25 trln rupees in January 2022.
In January, 118 companies issued CPs compared with 131 companies in December.
Of the CPs worth 922.04 bln rupees that were scheduled for redemption in January, papers worth 272.53 bln rupees were not rolled over. Net redemptions worth 169.30 bln rupees comprised papers issued by Bajaj Housing Finance, Export Import Bank of India, Hindustan Petroleum Corp, Indian Oil Corp, Jamnagar Utilities and Power, Larsen and Toubro and Reliance Retail Ventures.
The overall quantum of CP issuances fell also because manufacturing companies refrained from raising short-term debt due to rise in cost of borrowing. Instead, they took recourse to alternate sources of funds, such as working capital loans from banks.
Short-term debt issuances by manufacturing companies in January fell 32% from a month ago as rates on such papers rose by 20 basis points. Large banks with surplus liquidity have been offering lucrative short-term loans to select companies at rates lower than those on CPs.
The spread between rates on three-month CPs by manufacturing companies and State Bank of India's one-year marginal cost of funds-based lending rate shrank to 115 bps in January from 125 bps in December.
Bank credit growth to industries rose to 8.7% on year in December, primarily due to higher credit to large and medium industries, as per RBI data.
Non-banking finance companies raised 537.57 bln rupees through CPs in January, marginally lower than 541.72 bln rupees the previous month.
At 156 bln rupees, National Bank for Agriculture and Rural Development emerged as the top issuer of CPs in January, followed by Reliance Jio Infocomm with issuances worth 60.10 bln rupees. Other major issuers included Small Industries Development Bank of India, Housing Development Finance Corp, Hindustan Zinc and Panatone Finvest.
In spite of fall in issuances, rates on CPs rose by 20-30 bps last month because liquidity surplus shrank and yields on Treasury bills rose.
On Jan 31, liquidity in the banking system was estimated to be in a surplus of 26.87 bln rupees, down from 643.19 bln rupees on Jan 1.
Rates on three-month CPs issued by manufacturing companies were at 7.25-7.45% as on Jan 31, against 7.05-7.25% at the end of the previous month. Non-banking finance companies issued three-month CPs at 7.50-7.70%, up from 7.20-7.40% a month ago.
Yield on the 91-day T-bill, against which corporate short-term borrowings are benchmarked, rose 16 bps to close at 6.47% in January.
Usually, short-term debt papers are issued at a premium over the yield of treasury bills.
CERTIFICATES OF DEPOSIT
Fundraising through certificates of deposit fell 22.6% on month in January because of a cyclical fall in demand for funds from banks at the beginning of the financial quarter.
CDs worth 600.07 bln rupees were issued in January, against 775.07 bln rupees in December. Banks had raised 221.75 bln rupees through CDs in January 2022.
Typically, CD issuances tend to ease off after heavy borrowing by banks at the end of each quarter, when banks step up short-term loans to customers. This quarter-end rush leads to bulking up of a lender's book, enabling banks to show higher growth and improvement in ratios such as non-performing assets at the end of the quarter.
Fundraising through CDs by state-owned banks fell by 34.3% on month to 285.45 bln rupees in January, although these banks were still the top issuers of CDs last month, accounting for about 48% of the total issuances.
Private banks borrowed 203.62 bln rupees through CDs in January, down from 320.32 bln rupees in December.
Banks continued to depend on the short-term debt market to meet the robust demand for credit. According to latest RBI data, advances by banks rose 16.5% on year to 132.8 trln rupees in the fortnight ended Jan 13. Deposits continued to lag credit growth, growing 10.58% on year to 176.74 trln rupees.
"The credit growth has continued to be in double digits and has been broad-based across the segments and is likely to remain strong in 2022-23 (Apr-Mar)," CareEdge said in a report.
Some lenders also tapped the short-term debt market in January to roll over papers that were set to mature.
Among state-owned banks, Canara Bank topped the list of CD issuers, raising 156 bln rupees during the month. It was followed by Union Bank of India with issuances worth 69 bln rupees.
Among private sector banks, Axis Bank was the largest issuer, raising 54.62 bln rupees.
Rates on three-month CDs were at 7.20-7.45 as on Jan 31, up from 6.90-7.15% a month ago.
Details of CPs and CDs issued in January, amount in bln rupees:
| CPs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| Housing finance companies | 88.35 | 159.65 | (-)44.66 | 97.99 | (-)9.84 |
| Non-banking finance companies | 537.57 | 541.72 | (-)0.77 | 556.29 | (-)3.37 |
| Manufacturing companies | 339.16 | 499.46 | (-)32.09 | 592.04 | (-)42.71 |
| REIT | -- | 1.00 | (-)100.00 | -- | -- |
| Total(I) | 965.08 | 1,201.83 | (-)19.70 | 1,246.32 | (-)22.57 |
| CDs | Jan | Dec | MoM change in % | Jan-22 | YoY change in % |
| State-owned banks | 285.45 | 434.75 | (-)34.34 | 13.00 | 2,095.77 |
| Private banks | 203.62 | 320.32 | (-)36.43 | 164.75 | 23.59 |
| Other financial institutions | 111.00 | 20.00 | 455.00 | 44.00 | 152.27 |
| Total | 600.07 | 775.07 | (-)22.58 | 221.75 | 170.61 |
End
Edited by Aditya Sakorkar
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
