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Informist, Wednesday, Apr. 9, 2025

By Siddhi Chauhan

MUMBAI – Issuances in the commercial paper market rose Wednesday on the back of big-ticket issuances by the Small Industries Development Bank of India and the National Bank for Agriculture and Rural Development for rollover requirements, dealers said. The two financial institutions together raised INR 145.00 billion on Wednesday, accounting for three-fourths of the total amount raised through CPs. Borrowing through certificates of deposit fell due to elevated rates in the market even as the Reserve Bank of India's Monetary Policy Committee cut the repo rate, dealers said.

On Wednesday, CPs worth INR 192.75 billion were raised, up from INR 159.00 billion on Tuesday. CD issuances fell to INR 10.00 billion from INR 42.50 billion on Tuesday. NABARD was the largest CP issuer raising INR 95.00 billion through a three-month paper at 6.58%, while SIDBI raised INR 50.00 through a three-month paper at 6.58%. 

"The issuances are not very high if we exclude SIDBI and NABARD. They had to raise funds because of their rollover requirement otherwise not many issuers were keen to raise funds," a dealer at a brokerage fund said. "SIDBI was actually looking to raise funds at 6.50% through the three-month paper, but since the impact of the rate cut and stance change is yet to transmit to three months (papers), they had to raise it at 6.58% only." The rate-setting panel cut the repo rate by 25 basis points to 6.00% and changed the monetary stance to 'accommodative' from 'neutral'.

Rates on the three-month paper issued by manufacturing companies on Wednesday were at 6.55-6.75%, similar to Tuesday, while those on one-year paper fell by 10 bps to 6.80-7.00%. The rates on the three-month paper issued by non-banking finance companies were also unchanged at 6.65-6.85% and those on one-year paper fell by 10 bps to 7.20-7.30% on Wednesday. 

Bank of Baroda was the sole issuer in the CD market, raising INR 10.00 through a six-month paper at 6.85%. "There was little fund requirement today (Wednesday) as they had already issued a major chunk on Tuesday," a dealer at a state-owned bank said. "I don't think we will see good fund requirements on Friday as well. Issuance might pick up from next week." 

Fundraising was also hampered as Reuters Messenger, which is used by market participants for communication, crashed for almost two hours, they said. "Today (Wednesday) fundraising was also hampered for some time because RM (Reuters Messenger) had shut down for some time in the day," a dealer at a state-owned bank said. "We were not able to track the market because of that. Sure, it won't hinder borrowing but it sure can make the process a bit inconvenient as the borrowers will have to call everyone to issue funds."

Some banks also preferred not to tap the short-term debt market as the rates on the three-month paper issued by banks were largely similar to the levels on Tuesday, dealers said. Rates on the three-month papers cooled by a mere one basis point to 6.52-6.72% on Wednesday, while those on the one-year paper fell to 6.80-7.00% on Wednesday from 6.90-7.10% on Tuesday.

--Primary market

* Chambal Fertilisers and Chemicals, National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, Indian Oil Corp., ICICI Home Finance, Reliance Industries, CanFin Homes and Godrej Industries raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing on Friday was traded thrice at a weighted average yield of 5.8967%.

* NABARD's CP maturing on Friday was traded thrice at a weighted average yield of 6.2772%.

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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