Short-Term Debt:CP, CD rates up 5-10 bps as surplus liquidity narrows

Informist, Wednesday, Jul 20, 2022


By Vishal Sangani


MUMBAI – Rates on short-term debt papers, such as commercial papers and certificates of deposit, increased by 5-10 basis points as surplus liquidity narrowed in the banking system, dealers said.


Liquidity in the banking system is currently estimated to be in a surplus of over 1.70 trln rupees, unchanged from Tuesday. This is the lowest since October 2019.


The surplus is expected to narrow further in the coming days due to outflows on account of goods and service tax payments, dealers said.


Rates on three-month CPs of non-bank finance companies rose to 5.80-6.00% as against 5.70-5.90% on Tuesday, while those on papers of manufacturing companies increased by 10 bps to 5.60-5.80%.


Rates on three-month CDs were up at 5.45-5.70% as against 5.40-5.65% on Tuesday.


Some dealers also said that rates on short-term debt papers are likely to increase in the coming days, tracking the higher cutoff set by the Reserve Bank of India at the Treasury bill auction.


Today, the cut-off yield at the auction for 91-day Treasury bills was set at 5.3987% as against 5.2401% on Jul 13.


Usually, short-term debt papers are issued at a premium over the yield of Treasury bills.


On the issuances side, the supply of CPs rose today as some companies tapped the market to meet their funding needs and also to roll over papers set to mature in the coming days, dealers said.


So far today, CPs aggregating 20.50 bln rupees were issued as against 13.50 bln rupees on Tuesday. ICICI Securities was the major issuer, raising 7.50 bln rupees through papers maturing in three months at 5.85%.


Meanwhile, Indian Bank was the lone issuer of CDs today, raising 25.00 bln rupees at 5.50% through papers maturing in three months. The state-owned bank tapped the market for its funding needs and also as surplus liquidity narrowed, dealers said.


Funds raised through CDs fell today in the absence of big-ticket issuances.


On Tuesday, CDS worth 122.00 bln rupees were issued, with State Bank of India raising 100.00 bln rupees.


–Primary market

* ICICI Securities, Axis Securities, Tata Capital Financial Services, Network 18 Media and Investments, NTPC, Pilani Investment and Industries Corp and HDFC Securities raised funds through CPs.


–Secondary market

* HDFC Bank's CD maturing on Jun 15 was dealt at a weighted average yield of 6.5487%

* Bajaj Finance's CP maturing on Thursday was dealt four times at a weighted average yield of 4.8917%


At 1530 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 Namrata Rao


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