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Informist, Tuesday, May 13, 2025

By Siddhi Chauhan

MUMBAI – Fundraising through the short-term debt market picked up Tuesday due to rollover demand, dealers said. Commercial papers worth INR 16.75 billion were issued Tuesday, up from INR 7.25 billion Friday, while funds raised through certificates of deposit were at INR 59 billion, sharply higher than INR 10 billion Friday. Money markets were shut on Monday on account of Buddha Purnima.

Bank of Baroda was the largest CD issuer, raising INR 32 billion through a three-month paper at 6.52%, followed by Punjab National Bank, which raised INR 17 billion through a three-month paper at 6.50%. Indian Bank raised INR 10 billion through a three-month paper at 6.50%. 

During this week, CDs worth INR 196.05 billion are set to mature, of which Bank of Baroda's papers worth INR 53.40 billion will mature on Wednesday and Thursday. Punjab National Bank's CDs worth INR 19.65 billion are set to mature on Friday, while INR 15 billion matured on Tuesday, as per data compiled by Informist. 

"All of the funds raised today (Tuesday) were driven by rollover demand," a dealer at a private sector bank said. "Bank of Baroda and Indian Bank have a lot of maturities lined up for this week. However, some banks may not rollover their maturity because they feel rates are high. So they may raise funds through other avenues." 

Though the CP issuances more than doubled Tuesday from Friday, they were on the lower side compared with the numbers of offers made by prospective issuers, dealers said. "CP (commercial paper) issuances are not that high. Demand is there from issuers, but they are quoting lower levels," a dealer at a brokerage firm said. "But these levels won't be accepted by mutual funds as they prefer high yields."

On Tuesday, Cholamandalam Investment and Finance was the largest issuer, raising INR 8 billion through a six-month paper at 7.32%. On Friday, Canfin Homes had raised INR 5.00 billion through a three-month paper at 6.82% and Godrej Industries raised INR 2.25 billion through a three-month paper at 6.74%. 

Mutual funds are not investing aggressively in short-term debt instruments because of a cash crunch, market participants said. "In the past week, mutual funds were seen selling papers in the secondary market in order to fund their investments in CP, CD market," a dealer at a state-owned bank said. "This was driving secondary volumes quite high." 

Meanwhile, in the secondary market, rates in both markets cooled off by around five basis points as the military tensions between India and Pakistan eased over the weekend, dealers said. On Saturday, both countries agreed to a full and immediate ceasefire. 

On Monday, Prime Minister Narendra Modi said India had just paused attacks on terrorist camps and military sites in Pakistan. He said that over the next few days, India would evaluate Pakistan's resolve to the "understanding" both sides had arrived at on Saturday. He asserted that terror and dialogue, terror and trade couldn't go hand in hand.

The easing of the border tension failed impact on primary market borrowing costs. Indicative rates on the three-month paper issued by non-manufacturing companies were unchanged from Friday's level at 6.77-6.97%, while those on the three-month paper issued by manufacturing companies were also unchanged at 6.60-6.80% Tuesday. 

--Primary market

* Cholamandalam Investment and Finance, Aditya Birla Capital, HDFC Securities, ICICI Securities, Axis Finance and Bajaj Finance Securities raised funds through CPs.

* Punjab National Bank, Indian Bank and Bank of Baroda raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing Wednesday was traded once at a weighted average yield of 5.8409%.

* National Bank for Agriculture and Rural Development's CP maturing Wednesday was traded twice at a weighted average yield of 5.8409%.

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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