Informist, Monday, Jan 24, 2022

By Vishal Sangani

MUMBAI – Large issuances by Housing Development Finance Corp and NTPC led to a spike in funds raised through commercial papers today.

Also, a few companies rolled over papers set to mature in the coming days, while others tapped the market to meet fresh requirements for funds.

So far today, CPs aggregating 83.75 bln rupees were issued, as against 73.50 bln rupees sold on Friday. HDFC Ltd raised 55.00 bln rupees through papers maturing in three months at 3.95%.

Supply of short-term debt papers by big-ticket issuers was readily absorbed owing to their low risk profile.

Despite rise in issuances, rates on short-term debt papers were flat due to steady demand from mutual funds.

Demand from mutual funds, the biggest category of investors, was steady as a result of continued inflows into their schemes. This prompted fund houses to buy papers available in the market instead of keeping their funds idle.

Rates on three-month CPs of manufacturing companies were quoted at 3.80-4.05%, while those on papers of non-bank finance companies were quoted at 4.20-4.35%.

Lower rollovers in certificates of deposit amid even lower issuances has also aided the cash surplus with fund houses.

On the other hand, banks did not issue any certificate of deposit today as there is no immediate need for funds.

Liquidity in the banking system is currently estimated to be in a surplus of over 5.42 trln rupees as against 6.06 trln rupees on Thursday. Surplus liquidity in the banking system narrowed due to outflow on account of goods and services tax payments.

To support overnight money market rates, the Reserve Bank of India conducted an overnight variable rate repo auction today, where the central bank accepted bids worth 750.09 bln rupees as against a total amount of bids received for 1.37 trln rupees.

On Jan 20, the RBI had conducted first variable rate repo auction since March 2021. Liquidity was in high surplus due to money infused in the banking system to tackle the economic fallout of the COVID-19 pandemic. The RBI has conducted variable rate repo auctions only four times since March 2020.

Rates on three-month CDs were quoted at 3.70-3.90%, in the secondary market.

--Primary market

* Bharat Heavy Electricals, Housing Development Finance Corp, Birla Group Holdings and NTPC raised funds through CPs.

--Secondary market

* Small Industries Development Bank of India's CD maturing on Mar 25 was dealt two times at a weighted average yield of    3.6998%

* Panatone Finvest's CP maturing on Feb 11 was dealt two times at a weighted average yield of 4.5011%

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:

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

End

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

Edited by Vidhi Verma

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