Informist, Wednesday, Jul 13, 2022

By Vishal Sangani

MUMBAI – Punjab & Sind Bank was the lone issuer of certificates of deposit today, raising 17 bln rupees in total through papers maturing on Oct 6 and Jan 16 at 5.50% and 6.20%, respectively.

The state-owned bank tapped the market for its funding needs and also raised funds as demand for credit picked up due to a rise in small-ticket loans, an increase in working capital loans, and a growth in retail loans.

As per data from the Reserve Bank of India, the credit-deposit ratio was at a two-year high of 73.3% as on Jun 17, compared with 72.6% as on Jun 3.

Issuances by other banks, however, remained low after heavy borrowing in June.

Fundraising through CDs rose 53.1% on month in June because of higher demand for funds from banks at the end of the financial quarter, and a fall in surplus liquidity in the banking system.

Meanwhile, fundraising through commercial papers declined today because of lesser market participation amid low requirement for funds, dealers said.

Only two companies tapped the market to raise funds today as against six on Tuesday.

Lesser funds were raised by companies as they have already rolled over papers set to mature in the next few days.

So far today, CPs aggregating 2.70 bln rupees were issued, as against 31.00 bln rupees on Tuesday.

Rates on short-term debt were steady today due to lower issuances, dealers said.

Rates on three-month CPs of non-bank finance companies were quoted at 5.60-5.80%, while those on papers of manufacturing companies were quoted at 5.45-5.65%.

Rates on three-month CDs were quoted at 5.30-5.55%.

Some dealers said 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, cut-off yield at the auction for 91-day Treasury-bills was set at 5.2401% as against 5.1389% on Jul 6.

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

--Primary market

* L&T Finance and KEC International raised funds through CPs.

--Secondary market

* Axis Bank's CD maturing on Oct 12 was dealt four times at a weighted average yield of 5.4000%

* LIC Housing Finance's CP maturing on Oct 11 was dealt at a weighted average yield of 5.4799%

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:

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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