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Informist, Wednesday, Jun. 11, 2025

By Siddhi Chauhan

MUMBAI – Borrowing through commercial papers rose Wednesday on a big-ticket issuance from ICICI Securities, which raised INR 8 billion through three-month papers. Fundraising through certificates of deposits was slightly down from Tuesday due to redemption pressures from mutual funds, dealers said. 

ICICI Securities raised the above mentioned amount at 6.25%. It was followed by HDFC Securities, which raised INR 5 billion through a three-month paper at 6.29%. On Tuesday, Larsen & Toubro was the largest borrower, raising INR 7 billion through papers maturing in less than a month at 5.70%. Meanwhile, on the CD segment side, HDFC Bank was the sole issuer, raising INR 16.70 billion through a three-month paper at 5.78%. Export-Import Bank of India was the largest CD issuer Tuesday, raising INR 20 billion through a one-year CD issuance at 6.23%.

On Wednesday, CPs worth INR 21.00 billion were raised, slightly up from INR 16.75 billion Tuesday, while CDs worth INR 16.70 billion were raised, slightly down from INR 28.00 billion raised Tuesday. 

"Today (Wednesday) redemption pressure was seen from the mutual funds' side. People were more on selling side than on buying side. This acted as a deterrant to CP, CD issuances," a dealer at a brokerage firm said. "Due to this, rates across tenures were seen rising."

Indicative rates on three-month papers issued by non-bank finance companies rose to 6.20–6.40% from 6.15–6.35% on Tuesday. Similar-tenor papers issued by manufacturing companies rose to 5.90–6.10% from 5.87-6.07% Tuesday. Meanwhile, indicative rates on three-month CDs by banks rose by 5 bps to 5.80–6.00% Wednesday.

Another factor which resulted in the rise of short-term debt borrowing costs was the fear of the Reserve Bank of India coming up with a variable rate reverse repo auction, dealers said. A news flash Wednesday said the RBI could consider holding variable rate reverse repo auctions to anchor the money market rates near the repo rate of 5.50%.

"The already high rates started to rise even more when the news on chances of RBI conducting VRRR auction came," a dealer at another brokerage firm said. "If this happens, the costs of borrowing will rise. The market has not fully reacted to this news. We might see more reaction tomorrow (Thursday)."   

Generally, in order to ensure better transmission of rates, RBI considers the overnight rate to be aligned to the repo rate of 5.50%. However, due to excess liquidity, the overnight rates are aligned to the Standing Deposit Facility rate of 5.25%. On Tuesday, the RBI net absorbed INR 2.62 trillion, higher than INR 2.45 trillion Monday, central bank data showed.

--Primary market

* ICICI Securities, HDFC Securities, HDB Finance, and Grasim Industries, Tata Projects and Bajaj Finance Securities raised funds through CPs.

* HDFC Bank raised funds through CDs.

--Secondary market

* Indian Bank's CD maturing Wednesday was traded twice at a weighted average yield of 5.2568%.

* Small Industries Development Bank of India's CP maturing Wednesday was traded twice at a weighted average yield of 5.2903%.

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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