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Informist, Friday, Jan. 31, 2025

By Vidhushi RajPurohit

MUMBAI – Issuances in the short-term debt market slumped at the month-end as most companies and banks have already met their funding needs for January, dealers said. Only three issuers raised funds through certificates of deposit, borrowing a total sum of INR 66 billion, down from INR 150.50 billion raised on Thursday. For January, the total amount of CDs due for redemption was at INR 893.15 billion. Till Thursday, banks and non-banking financial entities issued CDs worth INR 915.85 billion this month. 

Small Industries Development Bank of India was the largest issuer for the day, raising INR 44 billion through a one-year paper at 7.62%. The two other issuers, HDFC Bank and Indian Bank issued one-year papers at 7.60% each. Indian Bank raised INR 10 billion and HDFC Bank borrowed INR 12 billion.

Owing to low issuances and hopes of improving liquidity conditions, rates remained steady in the short-term debt market. Rates on three-month CDs were quoted at 7.47-7.52%. The rates on three-month CPs issued by non-bank lenders were at 7.82-7.87%, while the indicative levels for three-month papers issued by manufacturing companies were at 7.52-7.57%, unchanged from Thursday.

No companies raised commercial papers on Friday, against INR 15.50 billion Thursday. Issuers anticipate an easing of borrowing rates in coming days with the Reserve Bank of India's proactive approach to managing the banking system's liquidity, dealers said. 

"There weren't any funds raised through CPs today because issuers have already met their demand for this month," a dealer at a brokerage firm said. "Also, many people are waiting for the rates to ease."

The central bank on Monday announced measures including open market purchases of gilts, buy/sell swap auction and a 56-day variable rate repo auction targeting the persisting deficit liquidity in the banking system. On Thursday, the net liquidity injected by the RBI--a proxy for systemic liquidity deficit—was at INR 2.22 trillion, RBI data showed. The durable liquidity in the banking system as of Jan. 10 was also in a deficit of INR 401.02 billion, the first deficit since July 2019.

--Primary market

* Indian Bank, Small Industries Development Bank of India and HDFC Bank raised funds through CDs.

* No companies issued CP.

--Secondary market

* HDFC Bank's CD maturing on Feb. 3 was traded five times at a weighted average yield of 6.6721%.
* Reliance Industries' CP maturing on Mor. 13 was traded thrice at a weighted average yield of 7.1999%.

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 Saji George Titus

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