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Informist, Monday, Jun. 16, 2025

By Siddhi Chauhan

MUMBAI – Borrowing through commercial papers rose sharply Monday as issuers borrowed ahead of upcoming maturities, dealers said. According to data compiled by Informist, CPs worth INR 423.48 billion and certificates of deposit worth INR 330.25 billion are set to mature this week. 

On Monday, CPs worth INR 94.50 billion were raised, up from INR 13.00 billion raised Friday. Issuers raised INR 36 billion through CDs, down from INR 63 billion raised Friday. The National Bank for Agriculture and Rural Development was the largest issuer of CPs. It raised INR 35 billion through two papers maturing in one month and three months at 5.90% and 5.95%, respectively. Larsen & Toubro and Bajaj Finance also raised a fair share through CPs ahead of maturities lined up for the week.

"Most of the fund requirement was rollover based only," a dealer at a brokerage firm said. "In this week a lot of CPs are set to mature. So issuers are borrowing before the rates rise." In this week, NABARD's CP worth INR 72.75 billion are set to mature. On Monday, the borrowing costs on three-month papers issued by non-banking financial companies were unchanged from Friday's level at 6.20-6.40%, while those on the three-month papers issued by manufacturing companies rose by 6 basis point from Friday to 5.96-6.12%.

Rates are expected to rise going forward due to significant outflows lined up in the coming days, dealers said. Outflows for advance tax that ended Monday would have likely drained INR 1.2 trillion to INR 1.5 trillion from the banking system, dealers said. In the coming days, outflows for goods and services tax which will likely start towards the end of this week are also expected to leave a significant impact on banking system liquidity, dealers said.

After rising to a three-year high of INR 3.62 trillion on Friday, net liquidity absorbed by the Reserve Bank of India fell to INR 2.80 trillion on Sunday. On Saturday, the net liquidity absorbed was INR 2.79 trillion.

HDFC Bank was the sole issuer of CDs. The private sector bank raised INR 36 billion through a one-month paper at 5.90%. Banks were mostly on the sidelines as a majority of them had tapped the short-term debt market Friday. On Friday, Axis Bank raised INR 30 billion through a three-month paper at 5.89%, followed by Punjab National Bank, which raised INR 20 billion through a three-month paper at 5.86%. The indicative rates on three-month CDs issued by banks also rose to 5.89-6.09 Monday from 5.80–6.00% Friday.

"Most of the banks have already fulfilled their requirements on Friday because of maturities in this week," a dealer at a state-owned bank said. "There doesn't seem to be any other requirements as even if the surplus has fallen, it is still above INR 2 trillion."

--Primary market

* L&T, Godrej Industries, ICICI Securities, HDFC Securities, Kotak Securities, Birla Group Holdings, IGH Holdings, Bajaj Finance, and NABARD raised funds through CPs.

* HDFC Bank raised funds through CDs.

--Secondary market

* Canara Bank's CD maturing Tuesday was traded six times at a weighted average yield of 5.3083%.

* Indian Oil Corp.'s CP maturing Tuesday was traded twice at a weighted average yield of 5.3250%.

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 Ashish Shirke

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