Short-Term Debt: CD, CP issuances nil as market participation low

Informist, Monday, Jan 30, 2023

By Vishal Sangani


MUMBAI – Banks and companies did not issue any certificates of deposit or commercial papers today as market participants remained on the side line due to caution ahead of the Union Budget for 2023-24 (Apr-Mar) on Wednesday, dealers said. The requirement of funds was also low, they said.


On Friday, Aditya Birla Finance was the only issuer. The company raised 5.0 bln rupees through CPs. Canara Bank was the only issuer of CDs. It raised 15 bln rupees through CDs.


Action in the primary market was muted as mutual funds were active in the secondary market to churn their debt portfolios and as they are facing redemption pressure, dealers said.


As at 1630 IST, secondary market volume of CDs and CPs on Clearing Corp of India's F-TRAC platform was 52.35 bln rupees and 73.15 bln rupees, respectively, against the usual daily volume of 20-40 bln rupees.


Capital raising by companies was low also due to a surge in rates in the short-term debt market as liquidity slipped into a deficit. Liquidity in the banking system is currently estimated to be in a deficit of 120.21 bln rupees, against a surplus of 431.25 bln rupees on Friday.


Liquidity slipped into a deficit as banks parked excess cash with the central bank and borrowed funds under marginal standing facility. As on Friday, cash balances with the RBI were at 8.14 trln rupees as against 7.92 trln rupees on Thursday.


Banks borrowed 273.70 bln rupees under marginal standing facility on Friday.


Rates on CPs were in a narrow range because of lower market participants, dealers said. Rates on three-month CPs issued by non-banking finance companies were quoted at 7.50-7.75%, while rates on papers of manufacturing companies were quoted at 7.25-7.45%.


Rates on three-month CDs increase to 7.20-7.45% as against 7.15-7.40% on Tuesday.


–Secondary market

* Indian Bank's CD maturing on Tuesday was dealt one time at a weighted average yield of 6.6077%

* National Bank for Agriculture and Rural Development's CP maturing on Tuesday was dealt eight times at a weighted average yield of 6.5936%


At 1630 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:


Certificates of deposit

Commercial papers







NOTE: Details of the deals have been received from market sources.




IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Ashish Shirke


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