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Informist, Wednesday, Mar. 5, 2025

By Kabir Sharma and Sachi Pandey

MUMBAI – Issuances in the short-term debt market were lower on Wednesday as liquidity conditions in the banking system improved significantly due to inflows from the Reserve Bank of India's $10.6 billion dollar/rupee buy/sell swap, dealers said. However, rates remained firm due to demand for credit to meet financial year-end funding needs, they said. "The year-end is coming and heavy demand for credit is there. Lots of roll overs of one-year papers are also happening so how will rates fall?" a dealer at a private bank said. 

Certificates of deposit worth INR 100.25 billion was raised on Wednesday compared with INR 124 billion on Tuesday. The National Bank for Agriculture and Rural Development was the main issuer, raising INR 65.25 billion via a one-year paper at 7.70%. Bank of Baroda, which was the only other issuer in the market on Wednesday, raised INR 35.00 billion for three-month papers at 7.57%.  

Rates on three-month papers remained in the range of 7.45-7.65% despite better liquidity conditions. The net liquidity injected by the RBI fell to INR 204.17 billion on Tuesday, sharply lower than INR 1.10 trillion on Monday. The proxy for liquidity deficit fell on the back of inflows from the settlement of the INR $10.06 billion dollar/rupeee swap auction which the central bank conducted on Friday, dealers said. 

In the commercial papers segment, companies raised INR 91.25 billion on Wednesday, a tad lower than INR 104.00 billion raised on Tuesday. Reliance Retail Ventures Ltd. was the largest issuer in this segment, raising INR 36.25 billion at 7.65% via a three-month paper. NABARD was active in the CP segment as well on Wednesday, raising INR 25.00 billion via a three-month paper at 7.60%. 

Rates on three-month CPs of non-bank financial companies were in the range of 7.90-8.10%, while those of manufacturing companies were in the range of 7.60-7.80%. Dealers said rates and issuances from non-bank financial companies are expected to remain on the higher side due to expectations of better credit offtake during the month coupled with a high amount of roll overs.

--Primary market

* National Bank for Agriculture and Rural Development, and Bank of Baroda raised funds via CDs.

* National Bank for Agriculture and Rural Development, Bajaj Housing Finance, Reliance Retail Ventures, ICICI Securities, Bajaj Finance, SBI Capital Securities, Birla Group Holdings, and IGH Holdings raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing on Thursday was traded seven times at a weighted average yield of 6.0911%.

* Small Industries Development Bank of India's CP maturing on Thursday was traded eight times at a weighted average yield of 6.0698%.

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 Tanima Banerjee

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