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Informist, Wednesday, Apr. 23, 2025

By Siddhi Chauhan

MUMBAI – Issuances in the certificates of deposit market rose sharply Wednesday as issuers rushed to take advantage of the current attractive levels, dealers said. This resulted in a few borrowers raising funds even before the refinancing date. Meanwhile, fundraising through commercial papers fell slightly as investors preferred the secondary market over the primary market, they added.

Borrowing through certificates of deposit was at INR 20 billion Wednesday. There were no issuances on Tuesday. Bank of Baroda and Punjab National Bank were the only CD issuers and each raised INR 10 billion through three-month paper at 6.45%. "They (banks) would have raised funds today (Wednesday) looking at the attractive levels. The current levels are attractive (for issuers) because the surplus has fallen sharply after GST (goods and services tax) outflows," a dealer at a private sector bank said. "They might have thought what if the rates go up in the coming days, so it is better to raise funds right now for someone who has maturity coming in this week." According to data compiled by Informist, CD worth INR 10 billion for Punjab National Bank are set to mature Friday, while CD worth INR 17.50 billion will mature for Bank of Baroda this week.  

According to data from the Reserve Bank of India, the central bank net absorbed INR 382.44 billion on Tuesday from the banking system--a proxy for liquidity surplus--down from INR 462.35 billion on Monday.

Issuances in the CP market remained muted Wednesday with issuers raising INR 30 billion, down from INR 37 billion Tuesday. Reliance Industries was the largest issuer, raising INR 23 billion on Wednesday through a two-month paper at 6.44%.

"Mutual funds don't have enough funds right now with them because of month-end pressure. This is the reason why we are not seeing enough issuances in the (CP) market," a dealer at a brokerage firm said. "Their (mutual fund) trading activity is more prominent in the secondary market right now." During the day, mutual funds were seen selling around INR 2 billion to INR 4 billion worth of papers maturing in May in the secondary market, a dealer at a brokerage firm said.

HDFC Securities and Kotak Securities were the other issuers that tapped the short-term debt market. On Tuesday, Mangalore Refinery and Petrochemicals and Bharat Heavy Electricals were the largest issuers. They raised INR 20 billion and INR 6.50 billion, respectively.

Rates for three-month CD, the most liquid tenure, were flat at 6.45-6.65%. The indicative rates on the three-month commercial paper issued by manufacturing companies were at 6.40-6.60%, while those issued by non-banking financial companies were similar to 6.75-95% seen Tuesday.

--Primary market

* Reliance Industries, HDFC Securities, and Kotak Securities raised funds through CPs.

* Bank of Baroda and Punjab National Bank raised funds through CD.

--Secondary market

* Bank of Baroda's CD maturing Thursday was traded once at a weighted average yield of 5.9870%.

* Bajaj Finance's CP maturing Thursday was traded twice at a weighted average yield of 5.8044%.

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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