Short-Term Debt: CP, CD rates rise; Canara Bank lone CD issuer

Informist, Friday, Jan 13, 2023

By Vishal Sangani


MUMBAI – Rates on short-term debt papers such as commercial papers and certificates of deposit increased today due to low demand from mutual funds, dealers said.


Rates on three-month CPs issued by non-banking finance companies rose to 7.40-7.70% as against 7.30-7.60% on Thursday, while rates on papers of manufacturing companies increased by 10 basis points to 7.20-7.40%.


Rates on three-month CDs were at 7.10-7.35%, up from 6.95-7.20% on Thursday.


Demand from mutual funds was low because most had parked sizeable funds in short-term papers this week.


Between Monday and Thursday, banks borrowed around 170 bln rupees, and companies raised around 240 bln rupees, according to data compiled by Informist.


Rates also rose as mutual funds were selling papers in the secondary market in an attempt to churn their debt portfolios, dealers said.


As at 1630 IST, secondary market volumes of certificates of deposit on Clearing Corp of India's F-TRAC platform were at 46.67 bln rupees, against the usual daily volume of 20-30 bln rupees.


Meanwhile, Canara Bank was the lone issuer of CDs today, raising 15.00 bln rupees at 7.14% through papers maturing on Apr 17. The state-owned lender tapped the market for its funding needs and also due to strong growth in credit, dealers said.


Most banks were on the sidelines as there is no immediate need for funds and in view of the prevailing surplus liquidity in the banking system.


Liquidity in the banking system is currently estimated to be in a surplus of 1.09 trln rupees, up from 943.29 bln rupees on Thursday.


Surplus liquidity widened further due to some inflows on account of the government's spending and also inflows of coupons on central and states government's bonds, dealers said.


On the other hand, there were no issuances of commercial papers in the primary market today due to low market participation.


On Thursday, companies had raised 22.50 bln rupees through CPs.


Some companies also remained on the sidelines as they weren't in immediate need of funds and also a few companies have already rolled over papers set to mature in the next few days.


–Secondary market

* Union Bank of India's CD maturing on Jan 16 was dealt four times at a weighted average yield of 6.2766%

* Mangalore Refinery and Petrochemicals's CP maturing on Jan 16 was dealt at a weighted average yield of 6.3056%


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 Aditya Sakorkar


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