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Informist, Friday, Jun. 27, 2025

By Siddhi Chauhan

MUMBAI – Issuances through the commercial papers were muted Friday as issuers were on the sidelines due to a spike in rates, dealers said. Short-term borrowing rates rose by 5 to 7 basis points due to redemption pressure from mutual funds and the variable rate reverse repo operation conducted by the Reserve Bank of India on Friday, dealers said.

"Rates are quite high right now because of redemption pressure from mutual funds, a dealer at a brokerage firm said. "ICICI Securities, which were getting 3-month paper at 6.25% levels, are now getting it above 6.37%, so instead they decided to raise a seven-day paper." On Friday, ICICI Securities raised INR 750 million through paper maturing in a week at 6.50%. 

On Friday, CPs worth INR 2.75 billion were raised, marginally higher than the INR 1.5 billion raised on Monday. On Friday, Adtiya Birla Capital was the largest CP issuer, raising INR 2 billion through a three-month paper at 6.30%. On Thursday, Godrej Industries was the sole issuer of CP, raising INR 1.5 billion through a three-month paper at 6.15%. 

At the seven-day variable rate reverse repo auction of INR 1 trillion, the central bank got bids worth INR 849.75 billion, which were accepted. The RBI set the cut-off rate of 5.49%, while the weighted average rate was set at 5.45%. Following the auction, the three-day call money rate rose to an intraday high of 5.60% and the tri-party repo rate touched an intraday high of 5.72%. The weighted average call rate ended at 5.38%, sharply up from 5.27% on Thursday.

The rates on the three-month certificates of deposit issued by banks rose to 5.90-6.10% from 5.85-6.05% on Thursday. Borrowing costs on the three-month CPs issued by non-banking financial companies rose to 6.25-6.45% Friday from 6.18-6.38% on Thursday, while indicative rates on three-month paper issued by manufacturing companies increased to 5.92-6.12% Friday from 5.87-6.07% on Thursday. 
 

Despite the sharp rise in rates, some banks tapped the short-term debt market due to quarter-end needs, dealers said. On Friday, Punjab National Bank was the largest CD issuer, raising INR 29 billion through a three-month paper at 5.92%, followed by Jammu and Kashmir Bank, which raised INR 9 billion through a three-month paper at 6.20%. On Thursday, Bank of India was the sole issuer of certificates of deposit, raising INR 20 billion for three months at 5.95%. 

-Primary market

* ICICI Securities and Aditya Birla Capital raised funds through CPs.

* Punjab National Bank and Jammu and Kashmir Bank raised funds through CDs.

--Secondary market

* Punjab National Bank's CD maturing Jul. 10 was traded once at a weighted average yield of 5.9995%.

* Small Industries Development Bank of India's CP maturing Jul. 9 was traded once at a weighted average yield of 5.9989%.

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

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

Edited by Saji George Titus

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