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Informist, Friday, May 30, 2025

By Sachi Pandey

MUMBAI – Fundraising in the short-term debt market slumped Friday, as major issuers remained absent from the market and investor appetite weakened, dealers said.

Issuers avoided the market due to tight cash flows and expectations of lower rates next week, market participants said. "Issuers are not coming because rates today (Friday) are higher than those for next week. So, they're waiting for rates to drop," said a dealer at a large brokerage. For example, Kotak Securities raised funds through three-month commercial papers at 6.58% with a Friday value date. For the same maturity paper with a value date of Jun. 6, the rate was about 5 basis points lower, according to a source.

"Investors, too, are low on cash, so they didn't invest much either," another dealer at a mid-sized brokerage firm said. 

As a result, CP issuances plunged to INR 10.50 billion on Friday from INR 126 billion on Thursday. The previous day's heavy supply was led by public-sector giants such as the Small Industries Development Bank of India, National Bank for Agriculture and Rural Development, and Indian Oil Corp.

On Friday, Bharat Heavy Electricals Ltd. was the largest issuer, raising INR 3 billion through three-month CPs at 6.55%. On Thursday, NABARD had led with a INR-50-billion three-month CP at 6.16%.

No banks tapped the market for certificate of deposit issuances on Friday. On Thursday, Canara Bank and Indian Bank issued INR 10 billion each worth of three-month CDs at 6.10% and 6.12%, respectively.

Meanwhile, rates in the short-term debt market remained steady after falling over 25 basis points through the week. Three-month CPs for non-banking financial companies were quoted at 6.35–6.55%, while those for manufacturing firms were at 6.17–6.47%. Three-month CD rates stood at 6.10–6.30%.

Participants now await the Reserve Bank of India's monetary policy outcome and commentary due Jun. 4–6.

On the liquidity end, market participants remained optimistic amid continued surplus liquidity in the system. On Thursday, the RBI had net absorbed INR 1.80 trillion from the banking system, lower than INR 1.91 trillion Wednesday, central bank data showed. Banks parked INR 2.19 trillion with the RBI at the Standing Deposit Facility rate Thursday, compared with INR 2.29 trillion Wednesday.

--Primary market

* Bajaj Housing Finance, Bajaj Finance Securities, ICICI Securities, Bharat Heavy Electricals Ltd., IIFL HOme Finance raised funds through CP.

--Secondary market

* HDFC Bank's CD maturing Monday was traded seven times at a weighted average yield of 6.0225%.

* Aditya Birla Finance Ltd.'s CP maturing Monday was traded three times at a weighted average yield of 6.0394%.

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 Tanima Banerjee

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