Credit rating agency, India Ratings and Research (Ind-Ra) in the second edition of its quarterly Commercial Paper (CP) Market Dossier ‘CP Market 2QFY22’ has said that the market has shown resilience during 2QFY22 amid the uncertain period of the second wave of COVID-19. The overall rising number of issuances in the primary CP market coupled with healthy volumes has been the trend. Moreover, it said that the rising number of issuers in a month suggests broadening of the market; although, there is a concentration risk pertaining to the tenor of borrowings.
As per the report, the short-term financing market has been showing strong momentum backed by conducive financing conditions. Moreover, a resilient corporate performance amid the fading fear of pandemic has aided the overall sentiments in the money market. As a result of the favourable environment and assurance from the RBI regarding loose policy stance, the money market rates have remained historically low, although modest hardening was visible in October 2021.
Ind-Ra further noted that corporates are emerging from the second wave of Covid-19 and are tapping the CP market positively in anticipation of higher working capital requirement, owing to the high commodity prices coupled with a recovery in capacity utilization.
