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Informist, Monday, Feb. 10, 2025

By Siddhi Chauhan

MUMBAI – Issuances in the short-term debt market picked up on Monday as corporates borrowed to roll over their upcoming debt maturities, dealers said. According to data compiled by Informist, certificates of deposit worth INR 129.25 billion and commercial papers worth INR 322.45 billion are set to mature in the week ending Feb. 14.  

On Monday, Union Bank was the sole issuer of CDs, raising INR 10 billion, while  INR 70.50 billion was raised through CPs. There was no borrowing through CDs or CPs on Friday. 

Despite rising from Friday, borrowing throught short term debt instrument was still low compared to the upcoming maturities, dealers said. Many deals offered in the primary market failed to get executed as borrowers and investors failed to agree on pricing, dealers said. 

"We are seeing a demand-supply mismatch right now, issuers are offering rates which were seen before MPC but investors don't want to lock in that rates, they want higher rates. Had it not been for this mismatch in rates, we would have seen much more issuances given the high amount of maturity due this week," a dealer at a brokerage firm said. "Only the companies which were nearing its rollover date might have raised funds today (Monday)." 

On Monday, Reliance Retail Ventures Ltd was the largest issuer of CPs, raising INR 50 billion via three-month paper at a rate of 7.53%, followed by Cholamandalam Finance, which raised INR 10 billion through a similar maturity at 7.95%. As per Informist data, this week, Reliance Retail Ventures' CPs worth INR 49 billion are set to mature till Tuesday. Meanwhile, the redemption amount for Cholamandalam Finance scheduled for this week was at INR 11 billion, of which INR 5.75 billion was set to mature during the day. 

Issuances in the CD segment were also low on Monday due to the same reason. Union Bank raised INR 10 billion at a rate of 7.35% for three months. "The rates have risen from before policy level, why would any one want to raise funds at a higher rate when we can fulfil our demand through another avenue?," a dealer at a state-owned bank asked. 

Rates on three-month short-term debt instruments had fallen sharply ahead of the RBI policy review on Friday in anticipation that the Monetary Policy Committee would ease its stance to accommodative from neutral, in addition to lowering the repo rate. Market players had also anticipated more liquidity-easing measures from the central bank. However, when the RBI delivered just a rate cut, short-term debt rates climbed back. 

Rates on the three-month certificates of deposit rose by 6 basis points on Monday to 7.40-7.45% from 7.35-7.39% on Friday. Rates on three-month commercial papers issued by manufacturing companies rose to 7.50-7.55% from 7.40-7.50% on Friday. Those on the commercial papers issued by non-banking financial companies rose to 7.75-7.80%. 

--Primary market

* Union Bank funds were raised through CDs.

* Reliance Retail Ventures Ltd, Cholamandalam Finance, Aditya Birla Money, HDFC Securities and GIC Housing Finance funds were raised through CPs.

--Secondary market

* Indian Bank's CD maturing on May. 23 was traded thrice at a weighted average yield of 7.5000%.
* Reliance Retail Ventures Ltd.'s CP maturing on Feb. 11 was traded 10 times at a weighted average yield of 6.4400%

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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