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Informist, Monday, Feb. 24, 2025

By Kabir Sharma

MUMBAI – Rates on certificates of deposit remained firm on Monday as issuances rose due to high redemptions towards the end of the month, dealers said. "Redemption pressure is there and that is why so many issuances are happening despite the rates being on the higher side," a trader at a brokerage firm said.

On Monday, the rates on three-month CDs were unchanged from Friday's 7.45-7.65%, with issuances increasing to INR 140.00 billion from INR 104.00 billion Friday. HDFC Bank was the largest issuer, raising INR 70.00 billion via a paper maturing in three months at 7.44%. Punjab National Bank mopped up INR 25.00 billion via a three-month paper at the same rate, while IDBI Bank raised INR 10.00 billion for three months at 7.52%. Indian Bank raised INR 20.00 billion and Union Bank of India INR 15.00 billion through three-month papers at 7.42%. Dealers said Canara Bank wanted to raise funds via CDs on Monday but chose not to because of higher borrowing costs.

"Liquidity is also tight in the system and outflows are there because of pressure from disbursals," a dealer at a state-owned bank said.

In the commercial paper segment, fundraising on Monday declined to INR 52.25 billion from INR 83.75 billion on Friday. "Issuances were lower because rates were too high. People who needed to borrow for rollovers were the only ones borrowing," a trader at another brokerage firm said. Rates on three-month CPs issued by manufacturing companies were around 7.51-7.71%, while rates on three-month papers of non-banking financial companies were quoted at 7.77-8.01%, a tad higher than Friday.

Aditya Birla Finance was the largest issuer of CPs on Monday, raising INR 15.00 billion at 7.73% for three months. ICICI Securities raised INR 7.50 billion at 7.77% and INR 5.00 billion at 7.75% through three-month papers.

--Primary market

* Aditya Birla Finance, ICICI Securities, Axis Securities, Kotak Securities, BOBCARD, Tata Capital, Tata Motor Finance, and Godrej Finance raised funds through CPs.

* Punjab National Bank, HDFC Bank, IDBI Bank, Indian Bank, and Union Bank of India raised funds through CDs.

--Secondary market

* Union Bank of India's CD maturing on Tuesday was traded six times at a weighted average yield of 6.3156%.

* Birla Group Holdings' CP maturing on Tuesday was traded three times at a weighted average yield of 6.3412%.

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

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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