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Informist, Friday, May 16, 2025

By Sachi Pandey 

MUMBAI – Fundraising through certificates of deposit rose sharply on Friday as banks turned to the short-term debt market to roll over maturing papers, dealers said. The total amount raised through CDs surged to INR 111 billion from INR 50 billion Thursday.

On Friday, the Small Industries Development Bank of India was the largest issuer, raising INR 50 billion through paper maturing in one year at 6.67%. HDFC Bank raised INR 35 billion through one-year paper at 6.62% and INR 6 billion through a three-month paper at 6.45%. This is a sharp uptick from Thursday, when only two banks issued CDs, with HDFC Bank being the largest issuer, raising INR 35 billion at 6.47%.

"Mutual funds are now more active than they were in the last week, so issuances have slightly picked up," a dealer at a private sector bank said. "Banks are mostly rolling over papers, as not much fresh need is there," a dealer at a private sector bank said. 

In contrast, activity in the commercial paper market slowed Friday as companies raised just INR 31 billion, down from INR 84.50 billion on Thursday. "Companies are tapping the market mainly for refinancing. On Friday, there may not have been an urgent need to raise funds. They could be waiting to reassess rates on Monday," a debt fund manager at a mid-sized mutual fund house said.

The fund manager also noted that most issuances this month are for refinancing, with limited fresh borrowing. "Compared to the same time last year, activity is lower, so this is not unusual given the comfortable banking system liquidity."

On Friday, ICICI Securities was the biggest CP issuer, raising INR 10 billion through three-month CP at 6.80%. On Thursday, Reliance Retail Ventures was the main issuer of CPs, raising INR 55 billion through a three-month paper at 6.53%.

Liquidity in the banking system remains positive. On Thursday, the Reserve Bank of India absorbed a net INR 2.23 trillion from the system, up from INR 1.84 trillion on Wednesday.

Rates in the short-term debt market remained unchanged after falling 7 basis points earlier in the week. Indicative rates on three-month CPs issued by non-banking finance companies were unchanged at 6.70–6.90% on Friday. Rates on similar-tenor papers by manufacturing firms were steady at 6.55–6.75%, while those by banks were quoted at 6.35–6.55%.

"Going forward, both banks and companies will tap the market as and when needed, based on their cash flow or maturity profiles," a debt dealer at a mid-sized brokerage firm said. For the rest of May, CPs worth INR 635.78 billion and CDs worth INR 374.25 billion are set to mature.

--Primary market

* Tata Capital Housing Finance, Godrej Properties, ICICI Securities, HDFC Securities, Aditya Birla Money, Motilal Oswal Financial Services, and Birla Group Holdings raised funds through CPs.

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

--Secondary market

* Axis Bank's CD maturing Monday was traded eight times at a weighted average yield of 5.7785%.

* PNB Housing Finance's CP maturing Monday was traded three times at a weighted average yield of 5.7941%.

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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