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Informist, Wednesday, May 7, 2025

By Siddhi Chauhan

MUMBAI – Borrowing through short-term debt fell sharply Wednesday as issuers had met most of their fundraising requirement in the intial four working days of the month, dealers said. Elevated borrowing costs in commercial papers and certificates of deposit markets also hampered borrowing, they added. 

On Wednesday, CPs worth INR 18 billion were issued, down from INR 24 billion Tuesday, while no funds were raised through CDs. "Many issuers have already borrowed aggressively, only those who need funds are coming to the market right now," a dealer at a brokerage firm said.

Since the beginning of this month, CPs worth INR 245.25 billion were raised, sharply higher than INR 55.44 billion, the average of funds raised in last week of April. Meanwhile, CD worth INR 115.00 billion were raised in the four working days of May, higher than INR 11.44 billion, the average of funds raised in last week of April. 

Aditya Birla Capital Ltd. was the largest issuer Wednesday and raised INR 6 billion through a three-month paper at 6.80%. On Tuesday, Mangalore Refinery and Petrochemicals Ltd. was the largest CP issuer and it raised INR 10 billion through a three-month paper at 6.64%. 

According to sources, Bharat Heavy Electricals Ltd. also wanted to raise funds through CPs due to some funding requirement. However, the company had to scrap the deal as they could not get their desired levels, dealers said. 

Indicative rates on the three-month papers issued by non-banking financial companies and manufacturing companies remained unchanged from Tuesday's level at 6.70-6.90% and 6.55-6.75% respectively.  

In the CD market, while most of the banks had sufficient funds with them, a few issuers could not raise funds due to elevated rates, dealers said. "Some banks were not able to raise funds as investors were quoting high rates," a dealer at a state-owned bank said. "This was happening because no one was sure what will happen at the press conference (Indian Army press conference on Operation Sindoor). However, that also didn't lend any major cues to the market."

Indian armed forces launched a military operation early Wednesday against nine sites in Pakistan and Pakistan-occupied Kashmir from where terrorists were suspected to be operating, the Indian defence ministry said in a statement. "No Pakistani military facilities have been targeted. India has demonstrated considerable restraint in selection of targets and method of execution," the ministry said. This move came after the terrorist attack in Pahalgam in which 25 Indians and one Nepalese citizen were killed.

In a press briefing Wednesday, Foreign Secretary Vikram Misri said intelligence inputs indicated more attacks on India were likely and the strikes on nine "terrorist camps" in Pakistan and Pakistan-occupied Kashmir were carried out to prevent and deter more such cross-border terrorism. However, the press conference did not give any negative trigger to the market. 

"There was nothing to take cues from the meeting. Saying Pakistan might attack India in upcoming days is not enough because that likelihood is always there," a dealer at a state-owned bank said. "We were looking forward to any information on what Pakistan would do next." 

While the rates on the three-month paper issued by banks were same from Tuesday's level at 6.50-6.70%, it was still on the higher end of the range even as the liquidity in the banking system remained surplus, dealers said. On Tuesday, the Reserve Bank of India had net absorbed INR 1.37 trillion from the banking system, slightly higher than INR 1.21 trillion Monday. The cash balance parked by banks at the RBI's Standing Deposit Facility was INR 9.61 trillion Tuesday, slightly up from INR 9.52 trillion Monday.

--Primary market

* Aditya Birla Housing Finance, Aditya Birla Capital, Bajaj Finance Securities, Motilal Oswal Financial Services, Motilal Oswal Finvest, and Kotal Mahindra Prime Ltd. raised funds through CPs.

* No funds were raised through CDs.

--Secondary market

* Punjab National Bank's CD maturing Thursday was traded seven times at a weighted average yield of 5.8635%.

* Sikka Ports and Terminal's CP maturing Thursday was traded four times at a weighted average yield of 5.9140%.

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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