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Informist, Thursday, May 22, 2025

By Kabir Sharma

MUMBAI – Issuances in the short-term debt market were lower on Thursday as market participants expected rates to ease going forward on account of a rate cut by the Reserve Bank of India at its monetary policy meeting in June. "Rates have come down a little but market is seeing it going even lower by the time the policy comes," a dealer at a brokerage firm said. "Even though rates have fallen due to low supply and high demand, they will continue to fall at least until first week of June."

Commercial paper issuances fell to INR 50 billion on Thursday from INR 134.50 billion on Wednesday. Reliance Retail Ventures was the largest issuer Thursday, raising INR 15 billion via a threee-month paper at 6.24%. Birla Group Holding was the second-largest issuer, raising INR 5 billion for a period of three months at 6.65%. 

IGH Holdings, one of the holding companies of the Aditya Birla group, raised INR 5 billion for three months but got a steeper rate at 6.70%. Dealers said issuances would be robust foing forward and rollover demand and fresh issuances were both expected to remain firm.  

Issuances of certificates of deposit were also lower on Thursday as banks are expected to be on the sidelines until the RBI's policy outcome on Jun. 6. Canara Bank was the sole issuer of CDs, raising INR 20 billion for three months at 6.20%. Dealers said demand was firm in the market as investors were looking to lock in rates before the policy.

Easing of overall liquidity conditions in the banking system also weighed on rates, dealers said. "Liquidity is quite comfortable and that's another reason why supply is on the lower side," a dealer at a private sector bank said. The RBI net absorbed INR 1.32 trillion from the banking system on Wednesday, and banks had parked INR 1.71 trillion with the RBI at the Standing Deposit Facility, a reflection of comfortable liquidity conditions in the market.

Market participants also anticipate an increase in issuances in June due to quarter-end needs and a likely rate cut in the first week.

--Primary market

* Reliance Retial Ventures, Tata Capital, ICICI Securities, Bajaj Finance Securities, Birla Group Holding, Pilani Investments, IGH Holdings raised funds through CPs.

* Canara Bank raised funds through CDs.

--Secondary market

* Indian Bank's CD maturing Friday was traded five times at a weighted average yield of 5.8126%.

* Bharti Telecom Ltd's CP maturing Friday was traded four times at a weighted average yield of 5.9777%.

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

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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