Short-term debt issue down

Demand from mutual funds—who are the major investors in short-term money market instruments—fell on Monday as most of them preferred to stay on the sidelines as the rates have been falling since last week, dealers said. On Monday, Punjab National Bank placed three-month CDs at 7.17 per cent, up 28 bps since last week.

There are also expectations that short-term rates could ease further as demand from banks could be low as this is just the start of the new quarter. Short-term money market instruments worth around Rs 1,100 crore were placed on Monday as against Rs 300 crore on Friday.

Three-month CDs were quoted at 7.10-7.30 per cent, flat as against Friday’s close, while three-month commercial papers were quoted at 7.40-7.60 per cent, compared with 7.45-7.65 per cent.

Rates in the one-year segment stood at 7.90-8.10per cent, unchanged from the previous levels.