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Informist, Friday, Mar. 7, 2025

By Kabir Sharma

MUMBAI – Issuances in the short-term debt market were lower Friday as borrowing costs remained firm, dealers said. On the lending side, mutual funds in particular were keen to lap up any and all issuances to lock in at high rates.

"They (mutual funds) are selling near-term paper in the secondary market and then coming to the primary market to lock in high rates," a dealer at a state-owned bank said. According to Clearing Corp. of India's F-TRAC platform, while secondary market trade volumes for certificates of deposit were 10% higher this week compared to the last, they were 68% higher for commercial paper over the same period.

Market participants expect issuances to remain on the higher side in March because of heavy redemption pressure. Demand for funds from banks and companies as the financial year-end approaches may also keep issuances at a high. "The amount of redemptions is the most in March, that pressure is there. Plus everyone wants funds on their balance sheet at year-end, so issuances will not stop till the end of the month," a dealer at a private bank said.

CDs worth INR 1.64 trillion are due for redemption in March as against INR 1.36 trillion in February. Similarly, CP worth INR 2.04 trillion are maturing this month, up from INR 1.33 trillion in February.

On Friday, rates on three-month CDs were in the range of 7.45-7.65%, while rates on three-month CP of non-banking finance companies were in the range of 7.90-8.10%. Manufacturing companies' CP were in the range of 7.60-7.80%. "Rates are still high and will remain like that this entire month," a dealer at a private bank said. "This is a cyclical thing because there is increased pressure on banks to step up their credit disbursals, so that is also driving demand."

CDs worth INR 52.50 billion were issued Friday, sharply down from INR 132.50 billion Thursday. HDFC Bank was the lead issuer, raising INR 25.00 billion for three months at 7.58%. Indian Bank also raised INR 20.00 billion for three months, but managed to do so at a marginally cheaper rate of 7.55%. Bank of Baroda raised INR 2.50 billion via three-month paper at 7.55%, while it had to set a coupon of 7.65% on a nine-month CD of INR 5.00 billion. Rates on three-month paper were in the range of 7.45-7.65%.

A total of INR 61.50 billion was raised through CP Friday, down from INR 68.95 billion Thursday. HDFC Securities was the largest issuer, raising INR 15.00 billion for three months at 7.89%, while ICICI Securities raised INR 10.00 billion at 7.87% via a three-month CP.

--Primary market

* HDFC Bank, Indian Bank, and Bank of Baroda raised funds via CDs.

* HDB Finance, ICICI Securities, HDFC Securities, Axis Securities, Kotak Securities, Bajaj Finance Securities, Aditya Birla Money, Sundaram Finance, and Tata Capital raised funds via CP.

--Secondary market

* Bank of Baroda's CD maturing Friday was traded eight times at a weighted average yield of 6.1102%.

* Reliance Jio Infocomm's CP maturing Friday was traded five times at a weighted average yield of 6.3992%.

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 Rajeev Pai

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