Rs 1.70 lakh crore raised through commercial papers in H1 of 2013-14: Prime

New Delhi, October 30, 2013

Corporate India raised Rs.1.70 lakh crore through issuance of commercial paper (CP) in the first half of this fiscal, Prime, the country's premier database on primary capital market, said today.
Mr Pranav Haldea, Managing Director of Prime, said this amount, which was raised by 169 issuers, was, however, down by 15 per cent from Rs. 2.01 lakh crore raised by 184 issuers in the same period last year.
CPs are unsecured money market instruments issued to raise short-term funds with maturity period of less than one year.
According to Mr. Haldea, fund raising through CPs, which had witnessed a lot of buoyancy in the last two years, nearly dried up after the Reserve Bank ofIndia (RBI) in mid-July raised the lending rates by 200 basis points under the marginal standing facility (MSF).
This had pushed up the short-term rates by more than 300 basis points, making it unviable for companies to borrow from the markets, he said
The subsequent easing of short-term rates has again led to companies going to the CP market in place of higher-cost borrowings from banks. Funds raised through CPs, which were at Rs. 36,702 crore in June and which fell to Rs. 29,520 crore in July and further to just Rs. 7,652 crore in August, saw a reversal of trend in September with Rs. 18,684 crore being raised, a press release from Prime said.
In the first half this year, 60 per cent of the funds raised were with a YTM of between 8 to 9 per cent while another 17 per cent were at a YTM of less than 8 per cent.
The private sector led with a 57 per cent share followed by all-India financial institutions and banks category at 24 per cent and public sector undertakings (PSUs) at 19 per cent.
Indian Oil Corporation was the highest issuer raising Rs.13,985 crore followed by Housing Development Finance Corporation at Rs.11,075 crore. The highest mobilisation was from the financial services /banking/term lending sector at 61 per cent followed by oil exploration/ drilling/ refining at 15 per cent and pharmaceuticals & drugs at 7 per cent.
The release said 65 per cent of the funds raised were for a tenure between 1-3 months. As many as 98 per cent of the issues (by amount) were rated A1+, it added.

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