Short-Term Debt: CP supply up, PFC taps mkt after gap of over 2-yrs

Informist, Tuesday, Jun 13, 2023


By Asmita Patil


MUMBAI – Fundraising through commercial papers rose today on the back of major issuance by Power Finance Corp, dealers said. 


Power Finance Corp tapped the market after a gap of over two years and raised 20 bln rupees through papers maturing on Sep 15 at 6.91% rate. Last time the non-banking finance company tapped the CPs market was in August 2020, and raised 31.20 bln rupees. 


So far today, companies and institutions raised 30.50 bln rupees through CPs as against 7.75 bln rupees on Monday. ICICI Securities raised 8.50 bln rupees through papers maturing in three months at 7.19% rate.


Fundraising through certificate of deposit also rose today as banks borrowed money to meet their funding requirements amid expectations of contraction in the banking system liquidity this week. 


So far today, banks raised 47 bln rupees through CDs. Canara Bank and Indian Bank were major issuers, raising 20 bln rupees each through papers maturing in three months at 6.97%.


Liquidity in the banking system is currently estimated to be in a surplus of 1.61 trln rupees, down from 1.82 trln rupees on Monday. The surplus liquidity is expected to narrow further in the coming days due to outflows of around 900 bln rupees–1.00 trln rupees as advance tax payment for Apr-Jun.


Despite the rise in issuances, rates on CDs and CPs remained flat today due to adequate demand from mutual fund houses, dealers said. 


There is a steady inflow in liquid funds of mutual funds, which is being deployed in such papers. Mutual funds are also reinvesting the funds received from maturity of short-term papers.


Rates on three-month CPs issued by non-banking financial companies were quoted at 7.10-7.25%, and rates on papers of manufacturing companies were quoted at 7.00-7.20%. 


Rates on three-month certificates of deposit were at 6.90-7.10%.


–Primary market

* ICICI Securities, Power Finance Corp, and Grasim Industries raised funds through CPs.

* Canara Bank, Indian Bank and Bank of Baroda raised funds through CDs.


–Secondary market

* HDFC Bank's CD maturing on Sep 12 was dealt six times at a weighted average yield of 6.9411%

* Small Industries Development Bank of India' CP maturing on Wednesday was dealt at a weighted average yield of 6.3886%


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 Akul Nishant Akhoury


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