Rates on commercial paper (CP) have fallen below the bank rate of 6.50 per cent. Larsen & Toubro (L&T) today struck a Rs 10 crore, 90-day CP deal at 6.48 per cent, two basis points below the bank rate. The paper was placed with a state-owned general insurer.
Earlier on Monday, L&T had raised Rs 10 crore for 90 days at 6.55 per cent. Both papers are rated P1+ by Crisil. In another deal, Exim Bank on Monday raised Rs 50 crore through a 90-day CP at 6.65 per cent.
Yields on CPs have fallen in the secondary market by more than a percentage point this month on the back of abundant liquidity in the banking system. The yield on a P1+ rated, three-month CP has dipped from over 7.50 per cent in the second week of June to 6.40 per cent now.
The spread between a three-month CP and a 91-day treasury bill has come down from 120 basis points to about 80 basis points at present.
Meanwhile, Rabo India Finance Pvt Ltd is planning to launch a Rs 100 crore bond issue shortly. The fixed and floating rate issue will have two options: one maturing in three years and the second after five years. The coupon will be fixed at 150 basis points above similar tenor gilt.
