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Informist, Wednesday, Feb. 12, 2025

By Siddhi Chauhan

MUMBAI – Issuances in the short-term debt market picked up on Wednesday as anticipation of a cool off in rates was shattered amid a week heavy on maturities, dealers said. On Wednesday, fundraising via certificates of deposit was at INR 27.50 billion up from just INR 10 billion on Tuesday, while commercial papers issuance stood at INR 58 billion slightly higher than INR 52.90 billion raised on Tuesday. 

"People were waiting for the T-bill (Treasury bill) auction to gauge market sentiment as this was the first auction after MPC (Monetary Policy Committee) meeting. Market participants had expected the rates on the 364-day T-bill to fall, but that did not happen," a dealer at a brokerage firm said. "This assured market participants that the awaited cool off won't happen so waiting for a cool off (in rates) won't help if you have maturity coming near." 

At the T-bill auction, RBI set the cut-yield for 91-day T-bill at 6.44% in line with market expectation. However, the cut-off yield on the 182-day T-bill was set at 6.57% against expectation of 6.55%, while that on the 364-day T-bill cut-off was set at 6.55% against expectation of 6.53%. Cut-off yields on the 182-day and 364-day Treasury bills were higher than expectation as traders looked to pick up gilts of similar maturities, dealers said. 

Consequently, issuers who were on the sidelines earlier this week tapped the short-term debt market due to high redemption scheduled for 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.

During the day, Reliance Industries was the largest issuer raising INR 30 billion through paper maturing in March at a rate of 7.05%, followed by National Bank for Agriculture and Rural Development raising INR 25 billion through three month paper at 7.45%. National Bank for Agriculture and Rural Development CP worth INR 82.25 billion are set to mature this month. 

Meanwhile, in the CD segment, Canara Bank was the largest issuer of CD raising INR 20 billion through three month paper at a rate of 7.41%, while Indian Bank raised INR 7.50 billion via paper maturing in December at a rate of 7.72%. "Most of the demand that we have seen today (Wednesday) is because of rollover due this month," a dealer at a state-owned bank said. Rates on three-month CDs remained unchanged from the previous day's level of 7.40-7.45%.

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

--Primary market

* Indian Bank and Canara Bank raised funds through CDs

* Reliance Industries, HDB Finance, ICICI Securities, NABARD, HDFC Securities, Bajaj Finance Securities and Axis Securities raised funds through CPs

--Secondary market

* Canara Bank's CD maturing on Feb. 12 was traded thrice at a weighted average yield of 6.3521%

* Reliance Retail Ventures' CP maturing on Feb. 18 was thrice at a weighted average yield of 6.8515%.

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 Deepshikha Bhardwaj

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