Informist, Friday, May 14, 2021

By Vishal Sangani

MUMBAI – Large issuances by Indian Oil Corp and Reliance Retail Ventures Ltd led to a spike in funds raised through commercial papers today.

These companies tapped the market to roll over papers that were set to mature in the coming days, and to meet fresh funding requirements.

So far today, CPs aggregating 67.60 bln rupees were issued, as against 31.00 bln rupees sold on Wednesday. Reliance Retail Ventures was the major issuer, raising 30 bln rupees through papers maturing in three months at 3.53%. Indian Oil Corp raised a total of 28 bln rupees through papers maturing in June.

These papers were readily absorbed because of their low risk profiles.

Despite a surge in issuances, the rates on CPs were flat today due to steady demand from mutual funds amid surplus liquidity, dealers said.

Rates on three-month CPs of non-bank finance companies were quoted at 3.65-3.80%, and those on the papers of manufacturing companies were quoted at 3.45-3.60%.

Mutual funds are seeing steady inflow in liquid funds, which they are deploying in such papers. They are also reinvesting the funds received from the maturity of short-term papers.

Subdued issuances of certificates of deposit have also compelled mutual funds to make higher investments in CPs instead of keeping funds idle. Issuance of CDs has been particularly scarce as there is a liquidity surplus in the banking system.

Currently, liquidity in the banking system is estimated to be in a surplus of over 5.13 trln rupees.

Indian financial markets were closed on Thursday on account of Ramzan Id-ul-Fitr.

No CDs were issued by banks today. With the growth in bank deposits consistently outpacing credit growth, banks have had little reason to tap the short-term debt market.

On Thursday, Axis Bank was the lone issuer, and had raised 30 bln rupees through CDs.

Growth in bank loans has been muted because of lower demand for big-ticket corporate credit and growing caution among banks even as deposit growth has been above 10% on a sustained basis.

Rates on three-month CDs were quoted at 3.30-3.50% in the secondary market.

--Primary market

* HDFC Securities, Chennai Petroleum Corp, Birla Group Holdings, Indian Oil Corp and Reliance Retail Ventures raised funds through CPs.

--Secondary market

* Bank of Baroda's CD maturing on Jun 1 was dealt two times at a weighted average yield of 3.3484%

* Oil and Natural Gas Corp's CP maturing on May 25 was dealt two times at a weighted average yield of 3.3918%

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 Patricia Hou

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