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Informist, Monday, Mar. 10, 2025

By Siddhi Chauhan

MUMBAI – Borrowings through short-term debt instruments rose sharply on Monday, with fundraising through commercial papers nearly tripling from Friday due to heavy redemptions, dealers said. CP issuances surged to INR 162.25 billion from INR 63.50 billion on Friday. Issuances of certificates of deposit increased to INR 76.50 billion from INR 52.50 billion on Friday.

With redemption pressure high, even elevated interest rates did not deter issuers from tapping the short-term debt market aggressively, dealers said. In March, CDs worth INR 1.64 trillion are due for redemption as against INR 1.36 trillion in February. Similarly, CPs worth INR 2.04 trillion are maturing this month, up from INR 1.33 trillion in February. Interest from mutual funds to lock in funds at higher yields also aided short-term debt issuances, dealers said.

National Bank for Agriculture and Rural Development was the biggest CP issuer, raising INR 82.50 billion through a three-month paper at 7.65%. Export-Import Bank of India raised INR 25.00 billion, also through a three-month paper, at 7.59%.

Canara Bank was the largest CD issuer, borrowing INR 33.00 billion through a one-year paper at 7.59%. Indian Bank raised INR 25.00 billion through a one-year paper at 7.61%, while HDFC Bank raised a total of INR 18.50 billion through a one-year CD and a three-month CD at 7.63% and 7.58%, respectively.

"Issuances are expected to remain high because maturity is quite significant in this month," a dealer at a brokerage firm said. "If you will see, in March around INR 180.00 billion for HDFC (Bank) alone will mature, out of which they have raised around INR 50.00 billion. Similarly, INR 170.00 billion is set to mature for Bank of Baroda in this month."

With short-term borrowing costs seen rising in the coming days due to advance tax payments of close to INR 2.00 trillion set to result in tightening of liquidity conditions, issuers are looking to raise funds at current levels, dealers said. On Monday, 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%.

--Primary market

* HDFC Bank, Indian Bank, and Canara Bank raised funds via CDs.

* NABARD, EXIM Bank, HDFC Securities, L&T Finance, Poonawala Fincorp, SBI Capital Securities, Pilani Investments, LIC Housing Finance, Birla Group Holdings, Muthoot Fincorp, Bajaj Finance, and Aditya Birla Money raised funds via CPs.

--Secondary market

* Bank of Baroda's CD maturing on Jun. 9 was traded nine times at a weighted average yield of 7.5747%.

* EXIM Bank's CP maturing on Tuesday was traded six times at a weighted average yield of 6.2819%.

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 Ashish Shirke

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