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Informist, Friday, May 2, 2025

By Siddhi Chauhan

MUMBAI – Fundraising through the short-term debt market rose Friday as rates eased 2-10 basis points on Friday, dealers said. The demand for papers also increased as the cyclical redemption pressure on mutual funds subsided, they said. Money markets were shut on Thursday on account of Labour Day. Rollover demand from issuers also aided short-term debt issuances, they added

Commercial papers worth INR 143.75 billion were issued Friday, up from 12.75 billion Wednesday. Bajaj Finance and Indian Oil Corp. were the largest CP issuers. Bajaj Finance raised INR 25 billion through a one-year paper at 7.04%, while Indian Oil Corp. raised the same amount through two papers maturing in nearly two months and three months at 6.59% and 6.65%, respectively. 

"In the first week of the month, mutual funds see cash inflow. Now that they (mutual fund) have cash with them, issuers who require funds have come into the market," a dealer at a brokerage firm said. "The demand is mostly rollover-based."

The certificates of deposit market, which was mostly quiet this week, saw some activity as banks raised INR 75 billion against nil on Wednesday. 

Bank of Baroda was the largest fundraiser in the CD segment, raising INR 30 billion through a three-month paper at 6.53%. Bank of India raised INR 25 billion through a three-month paper at 6.58%. 

"Many banks that wanted to raise funds at April-end couldn't do so because of elevated rates," a dealer at a private sector bank said. "Now that mutual funds have cash, the rates have cooled down. They (banks) are raising funds because of upcoming maturities."

The ease in redemption pressure resulted in a relief in borrowing costs, dealers said. On Friday, rates on three-month papers raised by banks fell slightly by two basis points to 6.53-6.83%. Meanwhile, indicative rates on the three-month papers issued by non-banking financial companies fell by 10 bps to 6.75-6.95%, while those issued by manufacturing companies were unchanged from Wednesday's level at 6.55-6.75%.  

--Primary market

* Indian Oil Corp., Axis Securities, HDFC Securities, Kotak Mahindra Prime, and Bajaj Finance raised funds through CPs.

* Indian Bank, Bank of Baroda, Bank of India, and Small Industries Development Bank of India raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing Monday was traded four times at a weighted average yield of 5.9037%.

* Motilal Oswal Financial Services' CP maturing Monday was traded once at a weighted average yield of 6.3543%.

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 Saji George Titus

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