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Informist, Wednesday, May 28, 2025

By Sachi Pandey

MUMBAI – Fundraising through commercial papers rose on Wednesday as companies tapped the short-term debt market to meet their upcoming maturities, dealers said. "Not many fresh borrowings are happening. Most of the issuances are from companies with papers maturing this week or next," a dealer at a mid-sized brokerage firm said.

According to Informist data, CPs worth INR 505.87 billion are set to mature between Wednesday and Jun. 6. This maturity pressure is pushing companies to roll over their borrowings, dealers said.

Dealers added that even though some companies are looking to issue fresh CPs, they are struggling to close deals due to a mismatch in rate expectations. "Issuers want to borrow at lower rates ahead of the expected rate cut, but investors feel the returns aren't justified at current levels. So, there's a disconnect," a dealer at a large-sized brokerage firm said.

On Wednesday, companies raised INR 26 billion through CPs compared with INR 15.25 billion on Tuesday. Aditya Birla Housing Finance was the largest borrower, raising INR 6 billion through three-month CPs at 6.23%. Its parent, Aditya Birla Capital raised INR 5.25 billion at a higher coupon of 6.47% for the same tenor. On Tuesday, Cholamandalam Investment and Finance Co. was the biggest issuer, raising INR 6.50 billion through one-year CPs at 7.17%, and INR 3 billion through six-month papers at 7.06%.

In contrast to the active CP market, no banks tapped the market for certificates of deposit. Dealers attributed the absence of CD issuances to the ample liquidity in the banking system. On Tuesday, only the Export-Import Bank of India issued CDs, raising INR 40 billion through one-year papers at 6.50%. "Banks have no urgency to borrow. Liquidity is comfortable, and they're hoping for better rates as rate-cut expectations build," a dealer at a private bank said.

The Reserve Bank of India absorbed a net INR 1.89 trillion from the banking system on Tuesday, up from INR 1.70 trillion the previous day, indicating surplus liquidity conditions.

Rates in the short-term debt market held steady for the second consecutive day after falling 10 basis points on Monday. Three-month CPs issued by non-banking finance companies were quoted at 6.50–6.70%, while those by manufacturing firms were at 6.45–6.65%. Rates on three-month CDs were at 6.12–6.32%. Market participants expect the short-term rates to ease further in the coming days, supported by expectations of a rate cut and continued surplus liquidity.

--Primary market

* UltaTech Cement, Aditya Birla Housing Finance, Aditya Birla Capital, Axis Finance, Kotak Securities, SBI Capital Securities, and Cholamandalam Finance raised funds through CPs.

--Secondary market

* Kotak Mahindra Bank's CD maturing Thursday was traded twice at a weighted average yield of 5.8166%.

* Tata Capital Housing Finance Ltd's CP maturing Thursday was traded three times at a weighted average yield of 5.7971%.

The 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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