Liquidity likely to ease further, commercial papers in demand

MONEY MARKET ROUND-UP

Corporate bonds: Firms rush to raise funds

The short-term bond market is abuzz with activity following a rush by companies to raise funds through commercial papers and by banks through certificate of deposits.

After a gap of four to six months, Tata Sons was in the market to raise around Rs 2,000 crore through commercial papers, said a dealer. "It has been a while since companies are in the bonds market to raise money," said a dealer. Tata Motors is also scouting for quotes to raise funds through CPs.

Interest rates on both CPs and CDs have come down since last week by 5-10 basis points across maturity. While three-month funds are available at 8-8.10 per cent, a borrower could fetch six-month and one-year funds at 8.30/8.45 per cent and 9.25 per cent, respectively. Among NBFCs, PNB Housing Finance also was seen in the market for raising funds.

In the long term, State Bank of India has announced a plan to raise Rs 1,000 crore and more for 15 years at 10.10 per cent through upper tier II bonds. These bonds carry a call option after 10 years. Similarly, HDFC borrowed Rs 150-200 crore through a 10-year bond at 10.10 per cent.

G-sec: Prices slip

In preparation to the dated security auction on Friday, market players engaged in selling of government papers. Gilt prices fell by 10-12 paise at the shorter end of maturity, while prices moved down by 8-10 paise for the medium and long- term papers.

Money: Liquidity may rise further

Liquidity remained comfortable in the banking system and the market expects it to go up following redemption of treasury bills this week, said a dealer. Call rates ruled at 6.05 per cent, while volumes in the collateralised lending and borrowing market ruled above Rs 30,000 crore. In the CBLO market, banks could borrow below 6 per cent against collateral of government papers.

Forex: Rupee closes lower

The foreign exchange market remained unusually dull and movements were flat. Tracking he equity market, which remained strong in the beginning of the trading session, the spot rupee opened at 40.89/88 as against closing of 40.98/99 to a dollar on Tuesday. However, lack of trading interest and demand led to it closing around 40.93/94 after hovering around 40.94 during the day.

The six-month and one-year annualised premiums closed at 1.08 per cent and 1.28 per cent, respectively.

Global markets: Euro, pound gain against dollar

Both the euro and the pound gained against the dollar by ruling at $1.3582 ($1.3612) and $2.01 ($2.0150). The Japanese yen ruled at $115.48 ($115.90).