Short-Term Debt: Rates flat, issuances nil amid quarter-end closing

Informist, Thursday, Sep 28, 2023


By Asmita Patil

MUMBAI – Rates on short-term debt instruments remained flat today as mutual funds stayed on the sidelines amid quarter-end closing pressure, dealers said.


Rates on three-month commercial papers issued by non-banking financial companies were quoted at 7.30-7.50%. Rates on similar maturity papers of manufacturing companies were quoted at 7.05-7.25%.


Rates on three-month certificates of deposit were at 7.00-7.20%.


"There is no activity in the market today as mutual funds don't have funds to trade…they had taken positions considering a holiday today," a dealer with a mid-sized brokerage firm said. 


Money market participants had borrowed or lent funds through triparty repo considering two-day maturity on Wednesday, as Thursday (today) was earlier notified as a money market holiday by the Reserve Bank of India. Dealers said around 3.20 trln rupees is already stuck in settlement in triparty repo. Mutual fund houses are the major lenders in triparty repo. 


Late Wednesday, the Reserve Bank of India said foreign exchange, rupee derivatives, government bond, and money markets will remain open on both Thursday and Friday to ensure smooth functioning and non-disruptive settlement of financial transactions for the quarter and half-year ending September.


The decision was taken due to a change in public holiday on account of Eid-e-Milad by the government of Maharashtra to Friday from Thursday. 


In the secondary market, only corporates and banks were active, dealers said. Activity was restricted in papers maturing in up to one month. 


Trade volume in the secondary market nosedived due to subdued activity. Today, deals worth 9.5 bln rupees were recorded on Clearing Corp of India's F-TRAC platform as against 51.8 bln rupees on Wednesday. 


There were no issuances in the primary short-term debt market for the third straight day today, dealers said. 


On Monday, companies and financial institutions had raised 36.75 bln rupees through commercial papers, and banks raised 30.5 bln rupees through certificates of deposit.

–Secondary market
* Bank of Baroda's CD maturing on Oct 20 was dealt twice at a weighted average yield of 7.2938%.
* National Bank for Agriculture and Rural Development's CP maturing on Dec 8 was dealt at a weighted average yield of 7.1200%.


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 Vandana Hingorani


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