Short-Term Debt: CP fundraising up on big-ticket issuance by NABARD

Short-Term Debt: CP fundraising up on big-ticket issuance by NABARD

Informist, Tuesday, Oct 17, 2023


By Asmita Patil and Sachi Pandey

MUMBAI - Fundraising through commercial papers rose today due to a big-ticket issuance by the National Bank for Agriculture and Rural Development, dealers said. 


So far, companies and financial institutions have raised 55 bln rupees through CPs, against 20.75 bln rupees on Monday. Of the total funds raised, National Bank for Agriculture and Rural Development raised 30 bln rupees through papers maturing in three months at 7.18%. 


Lack of major activity kept rates on short-term debt instruments flat today, dealers said. Rates on three-month commercial papers issued by non-banking financial companies were quoted at 7.55-7.75%. Rates on papers of similar maturity issued by manufacturing companies were at 7.20-7.40%.


Rates on three-month certificates of deposit were quoted at 7.15-7.35%. No CDs were issued today, despite demand for funds from some public sector banks, dealers said. 


On Monday, Axis Bank had raised around 70 bln rupees through papers maturing in September at 7.70%. 


Some dealers are of the view that rates on short-term instruments might go up in the near future as liquidity in the banking system is expected to remain tight. 


"...even if it comes in surplus, the RBI will come with VRRR (variable reverse repo rate) or OMO (open market operations), so as per my view, the liquidity is expected to stay in deficit", a dealer with a brokerage firm said.


At the start of trade today, liquidity in the banking system was estimated to be in a deficit of 63.59 bln rupees, against 183.03 bln rupees on Monday.


The liquidity in the banking system improved slightly due to inflows in the form of government spending. Dealers said that in the coming days, around 600 bln rupees is likely to come into the banking system on account of government spending. 

--Primary market

* National Bank for Agriculture and Rural Development, L&T Finance, Tata Capital Financial Services, and Grasim Industries raised funds through CPs.


--Secondary market
* ICICI Bank's CD maturing on Nov 13 was dealt once at a weighted average yield of 6.9994%
* Bajaj Finance's CP maturing on Wednesday was dealt thrice at a weighted average yield of 6.7903%.


At 1700 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.




Edited by Avishek Dutta


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