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Informist, Tuesday, Jul. 1, 2025

By Vidhushi RajPurohit

MUMBAI – As the month-end and quarter-end redemption pressure subsided, investor appetite for short-term debt instruments rose, dealers said. Issuances in the primary market increased sharply Tuesday, with total funds raised by companies through commercial papers jumping to INR 155.5 billion from INR 14.5 billion on Monday. However, ample systemic liquidity kept banks on sidelines with no certificates of deposit issued on Tuesday.

"Today (Tuesday), mutual funds were actively investing in papers and issuers also came so in primary market we saw good activity," a dealer at a mid-size brokerage firm said. "From banks side, maybe next week we can see some rise in activity as they will come to rollover their maturities."

Issuances in the CP market also jumped on account of big ticket issuances by Indian Oil Corp. Ltd., Reliance Industries Ltd. and Reliance Retail Ventures Ltd. Indian Oil Corp. was the largest issuer as it raised INR 50 billion through a paper maturing in September at 5.79%. The next big issuance was by Reliance Retail Ventures which raised INR 40 billion at 5.79%, also through a September-maturity paper.

According to dealers, most of the issuers tapped the market to raise funds to roll over their maturing papers and to meet some internal funding needs at the start of the quarter. Indian Oil Corp. has INR 10 billion worth of paper set to mature this month and Reliance Retail Ventures has an outstanding maturity of INR 30 billion.

"The borrowing rates will likely pick up by next week as more issuers come in the market, so it made sense for issuers to come to market right now when the rates are still not that high," the dealer at a mid-size brokerage firm said.

Borrowing costs on the three-month CPs issued by non-banking financial companies were at 6.22-6.32% Tuesday, down from 6.25-6.45% Monday. Indicative rates on three-month papers issued by manufacturing companies were at 5.77-5.90% Tuesday, down from 5.92-6.12% Monday.

As liquidity in the banking system remains above INR 2 trillion, banks did not tap the CD market for the second consecutive day. The RBI net absorbed INR 2.62 trillion from the banking system on Monday, with banks also increasing their cash reserves with the RBI. On Monday, banks parked INR 10.16 trillion with the RBI, higher than INR 9.79 trillion on Sunday.

"System is flush with funds as the month-end inflows were there, so banks will wait for the borrowing rates to come down more before they come to roll over their (maturing) papers," a dealer with a private sector bank said. In July, banks have INR 230.95 billion worth of outstanding CD due for maturity.

-Primary market

* Kotak Securities Ltd., Bajaj Finance Securities Ltd., HDFC Securities Ltd., Reliance Industries Ltd., Indian Oil Corp., Reliance Retail Ventures, Canfin Homes, ICICI Securities Ltd., Bajaj Finance Ltd., and Motilal Oswal Financial Services Ltd. raised funds through CPs.

* Banks did not raise any funds through CDs.

--Secondary market

* Indian Bank's CD maturing Wednesday was traded thrice at a weighted average yield of 5.3298%.

* Small Industries Development Bank of India's CP maturing Wednesday was traded twice at a weighted average yield of 5.2568%.

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 Ashish Shirke

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