CD issuance rise as MFs step up buying

CD issuance were up today because mutual funds stepped up investment in shorter tenure today on inflows in their liquid schemes. Few banks were also buying certificates of deposit (CDs) today, dealers said.

Today, Rs 1,775 crore worth of short-term papers were placed as against Rs 800 crore on Monday. “Primary issuance almost doubled today as there were incremental inflows in our schemes and we had cash to invest in shorter tenure such as three-months,” said a dealer with a mutual fund. Three-month CDs were today quoted at 4.70-4.80 per cent as against 4.70-4.90 per cent on Monday, while three-month commercial papers continued to quote in 4.80-5 per cent band.