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Informist, Tuesday, Apr. 29, 2025

By Siddhi Chauhan 

MUMBAI – Low demand from mutual funds kept activity in primary segment of the commercial paper market muted Tuesday, dealers said. Mutual funds have not been keen on buying short-term debt papers in the last few days due to the cyclical rise in redemptions at the end of the month. Meanwhile, Small Industries Development Bank of India was the only issuer raising funds through certificates of deposit Tuesday. 

On Tuesday, CPs worth INR 22.25 billion were raised, down from INR 69.00 billion raised Monday. Indian Oil Corp. Ltd. was the largest CP issuer raising INR 12 billion through a two-month paper at 6.59%. Motilal Oswal Financial Services Ltd. raised INR 5 billion through a three-month paper at 7.02%. 

"Mutual funds don't have enough funds with them right now because of month-end pressure. This is why we are not seeing many issuances," a dealer at a brokerage fund said. "Most of the fundraisers today (Tuesday) have come to the market because of rollover requirement." According to data compiled by Informist, Aditya Birla Money's CP worth INR 1 billion was set to mature Tuesday, as a result the non-banking financial company tapped the short-term debt market, dealers said. 

ICICI Securities also tapped the market in order to finance rollover requirment, dealers said. According to data compiled by Informist, the non-banking financial company raised just INR 12.50 billion while the maturity for this was month was much higher at INR 27 billion. Keeping the maturity in mind, ICICI Securities raised INR 500 million at 6.78% through three-month CPs, while Aditya Birla Money raised INR 1.25 billion through three-month paper at 6.96%. 

Due to lack of activity in the primary market, mutual funds were seen buying papers maturing in longer tenure in the secondary market to lock in better yields, dealers said. 

On the CD market side, despite demand from some banks for funds, only one CD was raised as mutual funds demanded higher rates, dealers said. "Some banks wanted to raise funds but they were asking for lower levels," a dealer at another brokerage fund said. Redemption pressure from mutual funds have impacted CD issuances.

Small Industries Development Bank of India raised INR 32 billion through a one year paper at 6.79% Tuesday due to some funding requirements, dealers said. No funds were raised through CD Monday.

The indicative rates on the three-month paper issued by banks were flat Tuesday at 6.50-6.70%. The indicative rates on three-month CPs issued by manufacturing companies were unchanged from Monday at 6.55-6.75%. Rates on similar-maturity paper issued by non-banking finance companies were similar to rates on Monday at 6.85-7.05%.

--Primary market

* ICICI Securities, Aditya Birla Money, Indian Oil Corp. Ltd., Motilal Oswal Financial Services Ltd., Canfin Homes Ltd., Godrej Industries, ICICI Securities and Oil and Natural Gas Corp. raised funds through CP.

* Small Industries Development Bank of India raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing Wednesday was traded once at a weighted average yield of 5.8774%.

* ICICI Securities's CP maturing Wednesday was traded once at a weighted average yield of 6.1635%.

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 Akul Nishant Akhoury

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