Short-Term Debt: CP supply sharply down on fewer market participants

Informist, Tuesday, Apr 20, 2021


By Vishal Sangani


MUMBAI – Commercial paper issuances were sharply down today as most companies aren't in immediate need of funds, dealers said.


Absence of big-ticket issuers also led to fall in the amount of money raised through CPs.


So far today, CPs aggregating 16.00 bln rupees were issued, as against 39.90 bln rupees on Monday. L&T Finance was the major issuer. The company raised 10 bln rupees through papers maturing on Apr 29 at 3.36%.


Fund-raising by companies was low as they have already rolled over papers set to mature in the next few days. Working capital requirement of the corporate sector has been low due to the economic fallout of the coronavirus outbreak.


Supply of CPs remained subdued because market participants refrained from placing large bets ahead of a market holiday, dealers said.


Financial markets are closed Wednesday on account of Ram Navmi.


Rates on three-month CPs remained flat due to subdued issuances, dealers said.


Rates on three-month CPs of non-bank finance companies were quoted at 3.65-3.75%, and those on the papers of manufacturing companies were at 3.40-3.55%.


Banks did not issue any certificates of deposit today. The issuance of CDs has been particularly scarce as there is a liquidity surplus in the banking system. With growth in deposits consistently outpacing credit growth, banks have had little reason to tap the short-term debt market.


Liquidity in the banking system is estimated to be in a surplus of over 5.81 trln rupees.


Rates on three-month CDs were quoted at 3.35-3.50% in the secondary market.


–Primary market

* Tata Motors, Birla Group Holdings and L&T Finance raised funds through CPs.


–Secondary market

* Axis Bank's CD maturing on Aug 23 was dealt two times at a weighted average yield of 3.4999%

* Reliance Industries' CP maturing on Apr 22 was dealt at a weighted average yield of 3.3191%


Following are the volumes at 1530 IST in the secondary market for short-term debt, in bln rupees, 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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