Mutual funds bought longer-tenure certificates of deposit (Cds) today eyeing the rise in rates amid supply of such papers from state-owned banks, dealers said.
Rates rose by 10 basis points as three state-owned banks placed total Rs 1,015 crore of CDs of various maturities. Fund managers were also keen to buy CDs because they received inflows in their liquid plus schemes.
Today, one-year CDs were dealt at 5.50-5.60 per cent compared with 5.40-5.50 per cent, while three-month CDs were at 3.55-3.65 per cent versus 3.50-3.60 per cent on Wednesday.
Three-month CPs were quoted at 5.10-5.60 per cent compared with 5.00-5.50 per cent. “Banks that were issuing CDs today were only for refinancing their existing CDs,” said a dealer with a state-owned bank.
Secondary market
Volume was low because mutual funds preferred to deploy their cash in fresh issuances, dealers said. “Mostly CDs maturing between January and March were dealt today,” said a dealer with a mutual fund. November maturity CDs of a state-owned bank were dealt at 4.10 per cent,unchanged from Wednesday.
