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Informist, Tuesday, Feb. 11, 2025

By Siddhi Chauhan

MUMBAI – Borrowing through short-term debt remained firm on Tuesday ahead of upcoming maturities this week, 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 Friday.

On Tuesday, Indian Overseas Bank was the sole CP issuer. The bank raised INR 10 billion through three-month papers at 7.60%. On Monday, Union Bank had raised INR 10 billion via CDs.

Despite maturities this week, many banks remained on sidelines due to elevated rates, dealers said. Out of INR 129.25 billion that is set to mature this week, only INR 25 billion was rolled over on Monday, while fresh issuance of INR 10 billion took place during the day, as per Informist data.

"The rates on three-month papers have continued to remain on the same levels. We don't want to issue at these levels because we find them elevated," a dealer at a state-owned bank said. "When we have other avenues, why should we borrow from here?"

Rates on three-month CDs remained unchanged from the previous day's level of 7.40-7.45%. On Monday, the net liquidity injected by the Reserve Bank of India--a proxy for systemic liquidity conditions--rose to INR 1.96 trillion from INR 1.33 trillion Sunday and as low as INR 382.16 billion on Feb. 4.

The liquidity deficit continued to widen as RBI sold dollars heavily this week in an attempt to stem the fall of the rupee, which on Monday was just 5 paise away from touching the 88 per dollar. The central bank's spot dollar sales drain out rupee liquidity from the banking system and foreign exchange market dealers estimate the central bank sold around $15 billion in spot on Monday and Tuesday. At the current exchange rate, this equals roughly INR 1.3 trillion.

In the CP segment, INR 52.90 billion was raised on Tuesday against INR 70 billion the previous day. On Tuesday, Reliance Industries Ltd. was the largest issuer. The company raised INR 25 billion through one-month CP at 7.05%. On Monday, Reliance Retail Ventures Ltd. was the largest issuer of CPs, raising INR 50 billion via three-month papers at 7.53% as CPs worth INR 49 billion were set to mature till Tuesday.

Most of the issuers are tapping the market in order to rollover their maturities, dealers said. However, similar to the CD market, a few issuers remained on sidelines due to elevated rates, dealers said.

Rates on three-month CPS issued by manufacturing companies on Tuesday were similar to Monday's close of 7.50-7.55%. Rates on CPs issued by non-banking financial companies were also unchanged at 7.75-7.80%. 

--Primary market

* Indian Overseas Bank raised funds through CDs

* Reliance Industries, ICICI Securities, Network 18, Godrej Industries, Axis Securities, HDFC Securities, Birla Group Holding, Julius Baer Capital raised funds through CPs

--Secondary market

* National Bank for Agriculture and Rural Development's CD maturing on Feb. 12 was traded four times at a weighted average yield of 6.4251%

* ICICI Securities' CP maturing on Feb. 12 was traded seven times at a weighted average yield of 6.4136%

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 Ashish Shirke

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