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Informist, Friday, Apr. 25, 2025

By Siddhi Chauhan

MUMBAI – Friday was a dry day for the short-term debt market as most issuers stayed on the sidelines, dealers said. Mutual funds restricted their activity in the primary market and, in an attempt to purchase higher yielding assets, sold shorter maturity paper in the secondary market, they added.

Only INR 5.00 billion was raised through certificates of deposits, sharply down from INR 17.00 billion raised Thursday. Bank of Baroda was the sole issuer in the CD market, raising INR 5.00 billion through a three-month paper at 6.45%. The bank was tapping the market to finance its rollover requirement, dealers said.

Indian Bank was also said to be in talks to raise funds Friday, but a mismatch in rates proved to be an impediment, dealers said. "Indian Bank was looking to raise funds at 6.43%, but because they did not get the level, the deal was not executed," a dealer at a broking firm said. "All the issuances we are seeing are because of some urgent demand."

A similar situation was seen in the commercial paper market with issuers raising just INR 13.00 billion, sharply down from INR 38.75 billion. Indian Oil Corp. Ltd. was the largest issuer in the CP segment and raised INR 10.00 billion through a two-month paper at 6.44%. Tata Projects and IGH Holdings Pvt. Ltd. were the other issuers to tap the market Friday.

"Even though IOC (Indian Oil Corp. Ltd) doesn't have rollover requirements, they are coming into the market," a dealer at a brokerage firm said. "They are possibly coming because of some tax or internal requirement which we may not be aware of."

With demand from issuers dim, mutual funds shifted their focus to the secondary market. The June maturity paper was actively traded as mutual funds sold these to buy paper maturing in December and March, dealers said.

Rates on three-month CDs issued by banks were flat at 6.45-6.65%. The indicative rates on three-month CP issued by manufacturing companies were unchanged from Thursday at 6.40-6.60%. Rates on similar-maturity paper issued by non-banking finance companies were flat at 6.75-6.95%.

--Primary market

* Indian Oil Corp. Ltd., IGH Holdings Pvt. Ltd., and Tata Projects raised funds through CP.

* Bank of Baroda raised funds through CDs.

--Secondary market

* Kotak Mahindra Bank's CD maturing Monday was traded five times at a weighted average yield of 5.9078%.

* National Bank for Agriculture and Rural Development's CP maturing Monday was traded six times at a weighted average yield of 5.9232%.

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 Rajeev Pai

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