Short-term debt issues fall

The market saw few certificates of deposit (CDs) being issued on Monday, as banks preferred to remain on the sidelines noting the abundant liquidity in the banking system, dealers said.

On Monday, banks parked Rs 43,035 crore at Reserve Bank of India’s (RBI’s) reverse repo compared with Rs 35,720 crore on Friday.

“Banks are still high on liquidity and so are not keen on issuing Cds. Even if they do want to issue CDs, most are keen on issuing it at the rates they want,” said a dealer with a state-owned bank.

Mutual funds too are not keen on investing in papers beyond November as they anticipate a rise in rates in the coming months, dealers said.

“Expectations are that the rates would only move upwards from here, and so it doesn’t make sense to invest huge amounts in longer-tenure papers,” said a dealer with a mutual fund.

Three-month CDs were quoted at 4.15-4.35 per cent, compared with 4.1-4.3 per cent on Friday, while three-month commercial papers (CPs) were quoted at 4.5-4.7 per cent, unchanged from Friday.

One-year CDs were quoted at 6.15-6.35 per cent, compared with 6.05-6.25 per cent.

On Monday, Allahabad Bank placed Rs 500 crore of three-month CDs at 4.3 per cent.

Indian Oil Corp placed Rs 500 crore through one-year CPs at 5.92 per cent.