T-bill volumes take a hit with fall in liquidity
trades has dropped sharply over the past two months, reflecting the sudden tightening in broader market liquidity that appears to have sapped investor interest in the most liquid of government debt instruments.
Until the week ended August 25, T-bill trades worth ₹1.1 lakh crore were carried out, with the average trades at ₹6,820.5 crore, Clearing Corporation of India Limited data show. The trades in July, which were 40% lower than those in August, were at ₹1.5 lakh crore with the average at ₹7,256.3 crore, the data showed.
The CCIL data includes over-the-counter trades, brokered deals and those struck in the Reserve Bank of India's Negotiated Dealing System Order-Matching trade platform.
«In terms of numbers of trades where the single ticket is more than ₹1,000 crore, in May, there were 162 trades where the single ticket was more than ₹1,000 crore.
In June, it shot up to 197. In July that falls back to 156 and in August it is 132 so far.
In July and August, it seems that sudden interest from constituent entities has fallen sharply after a huge spike in June,» a treasury official at a mutual fund said on condition of anonymity.
The average trades in June were at ₹12,478 crore, data showed.
Some analysts cited increased investment in the quarter-end amid large surplus liquidity in the banking system in June as a factor that may have driven the trading interest. Anticipation of the government reducing the supply of T-bills in the second quarter to cool off elevated yields on such securities may have also spurred more transactions, analysts said.
«T-bills saw reduction in supply by ~25% as RBI has reduced the borrowing amount for T-bills from ₹32,000 crore per week in the 1st quarter to ₹24,000 crore in the second quarter.
