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Informist, Tuesday, May 6, 2025

By Siddhi Chauhan

MUMBAI – Fundrasing through certificates of deposit rose sharply Tuesday as banks tapped the market to finance rollover needs, dealers said. Meanwhile, borrowing through commercial papers fell due to issuers raising heavy amount since the start of the month, they added. CD issuances Tuesday were at INR 30 billion, up from INR 10 billion raised Monday, while CP issuances were at INR 24.00 billion Tuesday, down from INR 59.50 billion raised Monday. 

Bank of Baroda who was the sole CD issuer raised INR 30 billion through a three-month paper at 6.50%. "Bank of Baroda has a lot of maturities in this week, that is the reason why they are coming into the market," a dealer at a brokerage firm said. According to data compiled by Informist, Bank of Baroda CD maturity for this week itself amounted to INR 78.50 billion. Out of the said amount, INR 29 billion matured Monday while INR 29.50 billion matured Tuesday. Since Thursday, the bank has raised CD worth INR 71.50 billion. 

"The rates at which they have issued funds have cooled off due to availability of funds," the brokerage firm said. "Most mutual funds have also received inflows and banking system liquidity is also comfortable easing pressure on rates." On Tuesday, the rates on the three-month papers issued by banks fell by three basis points to 6.50-6.70%. 

Borrowing costs is expected to fall slightly in the coming days as the remaining mutual funds may get cash on Thursday from maturing investments, dealers said. On Monday, the RBI had net absorbed INR 1.21 trillion from the banking system, down from INR 1.38 trillion on Sunday. The cash parked by banks at the RBI's Standing Deposit Facility was largely unchanged at INR 1.63 trillion from Sunday.

In the upcoming days, liquidity surplus is expected to fall as outflows for excise duty will start likely by Wednesday, dealers said. They estimated outflows will range from INR 450 billion to INR 700 billion. 

Fundraising through CPs fell due to muted demand from issuers, dealers said. "Many issuers have already fulfilled their rollover demand in the starting of the month. This is why we are not seeing much demand from issuers right now." a dealer at another brokerage firm said. In just four working days of May, CPs worth INR 227.25 billion were raised, sharply higher than INR 55.44 billion, the average of funds raised in last week of April.  

Mangalore Refinery and Petrochemicals Ltd. was the largest CP issuer and raised INR 10 billion through a three-month at 6.64%, followed by Larsen and Toubro Ltd. which raised INR 8 billion through a three-month paper at 6.55%. Godrej Industries, Julius Baer Capital and Aditya Birla Capital, Mangalore Refinery and Petrochemicals Ltd. were the other fundraisers which tapped the market Tuesday.

Indicative rates on the three-month papers issued by non-banking financial companies fell by 5 bps to 6.70-6.90% Tuesday. Rates on three-month paper issued by manufacturing companies were unchanged from Monday's rates at 6.55-6.75%. 

--Primary market

* Godrej Industries, Aditya Birla Capital, Larsen & Toubro Ltd., Mangalore Refinery and Petrochemicals Ltd. and Julius Baer Capital raised funds through CPs.

* Bank of Baroda raised funds through CDs.

--Secondary market

* Union Bank's CD maturing Wednesday was traded four times at a weighted average yield of 5.9013%.

* Tata Motors Finance Ltd's CP maturing Wednesday was traded five times at a weighted average yield of 5.9505%.

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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