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Informist, Thursday, Jan. 2, 2025

By Kabir Sharma

MUMBAI – After a barren straddling at the end of 2024 and the start of 2025, Thursday saw a single certificate of deposit issued for the first time in three days, with Punjab & Sind Bank raising INR 15.00 billion through a three-month paper at 7.55%, dealers said.

"Rates have not cooled down and banks met their redemption needs last month, so that led to the muted issuances in the last few days," a dealer at a state-owned bank said, adding that activity has also been subdued due to market participants going on holiday at the end of the calendar year.

Meanwhile, the commercial paper market jumped into action Thursday, with issuances worth INR 62.00 billion, sharply up from just INR 1.50 billion Wednesday. Reliance Jio Infocomm was the largest issuer on Thursday, raising INR 27.00 billion through a paper maturing in two-and-a-half months.

Rates on three-month commercial papers issued by non-banking finance companies were in the range of 7.50-7.55% while those of manufacturing firms were in the range of 7.15-7.20%. "People will start issuing once the rates ease a bit. It makes no sense to borrow at higher rates when everyone is expecting a policy rate cut in February," a dealer at another state-owned bank said.

The Reserve Bank of India's Monetary Policy Committee has left the repo rate unchanged at 6.50% for nearly two years now. However, it loosened its stance to neutral in October, while two members of the six-strong committee voted for a 25-basis-point reduction in the repo rate last month. While inflation remains elevated, growth slowed down to a seven-quarter low in Jul-Sept. Several economists expect the repo rate to be lowered by 25 bps at the Feb. 5-7 meeting of the MPC.

--Primary market

* Tata Capital, Kotak Securities, Bajaj Financial Securities, Reliance Retail Ventures, Reliance Jio Infocom, Tata Housing Development, and ICICI Securities raised funds through CPs.

* Punjab & Sind Bank raised funds through CDs.

--Secondary market

* Small Industries Development Bank of India's CD maturing on Jan. 16 was dealt five times at a weighted average yield of 7.0007%.
* PNB Housing Finance's CP maturing on Jan. 24 was traded once at 7.2503%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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