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Informist, Friday, Apr. 4, 2025

By Siddhi Chauhan and Kabir Sharma

MUMBAI – Big-ticket issuances by Indian Oil Corp. and Reliance Retail Ventures totalling INR 80 billion for rollovers led to a spike in fundraising through commercial papers on Friday, dealers said. A slight fall in borrowing costs also prompted companies to tap the short-term debt market, they said. CP issuances totalled INR 142.00 billion on Friday against INR 96.25 billion on Thursday. Issuances of certificates of deposit on Friday stood at INR 12.00 billion against INR 35.00 billion the previous day.

IOC raised INR 50 billion through two CDs maturing in June at 6.50% and 6.43%. Reliance Retail Ventures raised INR 30 billion through three-month paper at 6.68%. Hindustan Petroleum Corp. raised INR 12.50 billion through a near-two-month CD at 6.48%. On Thursday, HPCL was the largest issuer, raising INR 40.00 billion through a paper maturing in June at 6.53%.

"Issuances today (Friday) are due to rollover requirement. Some companies are also tapping the market because the rates have cooled off sharply," a dealer at a brokerage firm said. "HPCL usually borrows when borrowing costs cool down, which has happened right now. This is the reason why they have picked up funds today."

CP and CD rates plunged 100 basis points in first two trading days of April on improved liquidity conditions and the widespread expectation that the repo rate will be cut further by the Reserve Bank of India's Monetary Policy Committee on Wednesday. Rates on three-month commercial papers of non-banking finance companies fell further by 10 bps from Thursday at 6.75-6.90%, dealers said. Rates on CPs issued by manufacturing companies were unchanged at 6.65-6.85%.

Borrowing through CDs fell as liquidity conditions in the banking system improved further, dealers said. "Short-term debt market is a liquidity driven market and since we have a good amount of liquidity right now, the need for funds is not seen," a dealer at a state-owned bank said. "Also, we don't see many issuances in April, it is generally a dry month."

The RBI's continued infusion of liquidity in recent weeks has pushed liquidity further into surplus. On Thursday, the central bank absorbed a net INR 2.16 trillion from the banking system. Banks, meanwhile, parked a record INR 4.13 trillion at the RBI's Standing Deposit Facility. Indian Bank was the sole issuer of CDs Friday, raising INR 12 billion through a three-month paper at 6.55%. The comfortable liquidity conditions and limited demand from issuers kept rates on three-month CDs issued by banks unchanged from the previous day at 6.60-6.80%.

--Primary market

* HPCL, National Bank for Financing Infrastructure and Development, IOC, Tata Motors, Kotak Mahindra Investments, Tata Motor Finance, Reliance Retail Ventures, ICICI Securities, Kotak Securities, and L&T Finance raised funds through CPs.

* Indian Bank raised funds through CDs.

--Secondary market

* Bank of India's CD maturing on Jun. 19 was traded thrice at a weighted average yield of 6.4302%.

* Cholamandalam Investment and Finance Co.'s CP maturing on May 14 was traded at a weighted average yield of 6.5501%

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 Ashish Shirke

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