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Informist, Wednesday, Jan. 22, 2025

By Kabir Sharma

MUMBAI – Issuances of certificates of deposit by banks remained subdued on Wednesday due to high borrowing rates on account of tight liquidity conditions, dealers said. Union Bank of India and IDFC FIRST Bank were the only ones to borrow from the CD market, although dealers said they mostly did so for rollovers. "Market was almost at the same levels today (as Tuesday). There were few issuances...as they (banks) had maturity (papers maturing), they were rolled over," a dealer at a brokerage firm said.

While Union Bank of India raised INR 5.75 billion at 7.63% through a paper maturing in a year, IDFC FIRST Bank raised INR 2.00 billion at 7.75% for the same tenure.

Rates on three-month CDs were unchanged from Tuesday at 7.50-7.55%, while those for one year rose 5 basis points to 7.65-7.75%. The movement for three-month CPs issued by non-banking finance companies was similar, rising 5 bps from Tuesday to 7.90-7.95%. Meanwhile, rates on three-month CPs issued by manufacturing companies were unchanged at 7.55-7.60%. According to short-term debt market dealers, the persistent tightness in the systemic liquidity is expected to keep borrowing costs elevated, with the net liquidity injected by the Reserve Bank of India--a proxy for systemic liquidity conditions--at a near-one-year high of INR 2.71 trillion on Tuesday.

Dealers also took note of selling in the secondary market for commercial papers, with issuances seen picking up as the end of the month approaches. Reliance Retail Ventures was the largest issuer of CPs on Wednesday, raising INR 31.00 billion at 7.28% through a paper maturing in 2.25 months.

--Primary market

* Godrej Properties, Godrej Consumer, Kotak Securities, Reliance Retail Ventures, Tata Motors Finance, Aditya Birla Finance, Export-Import Bank of India, and ICICI Securities raised funds through CPs.

* IDFC Bank and Union Bank of India raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing on Jan. 31 was traded four times at a weighted average yield of 7.1504%.
* ICICI Securities' CP maturing on Thursday was traded seven times at a weighted average yield of 6.7631%.

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

Edited by Avishek Dutta

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