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Informist, Friday, Aug. 1, 2025

By Vidhushi RajPurohit

MUMBAI – Primary market activity in the short-term debt market rose on Friday as demand from mutual funds resurged, with the month-end redemption pressure easing, dealers said. Issuers, who had remained on the sidelines Thursday, were able to find investment to meet their borrowing needs, they said. 

"MFs (mutual funds) had some inflows, so they were active in the market today," a dealer at a brokerage firm said. "Yesterday (Thursday) was the last day of the month, so as usual, there were less investors and some companies who were trying to borrow could not do it."

Non-banking financial institutions and companies raised INR 39.25 billion through commercial papers on Friday, up from INR 5.50 billion raised Thursday. Indian Oil Corp. was the largest CP issuer, raising INR 20 billion through a three-month paper at 5.80%. Dealers said the company likely raised funds to refinance its upcoming maturities. The petroleum refining corporation has a CP worth INR 30 billion, which will mature next week.  

The other major issuer was National Bank for Agriculture and Rural Development, which raised INR 15 billion issuing a 10-month paper at 6.25%. The non-banking financial company has INR 50 billion worth of CPs due for maturity in August. 

Increased investor appetite and the need to roll over maturing papers for August also resulted in an increase in fundraising through certificates of deposit Friday. Issuances of CDs surged to INR 70 billion against no issuances on Thursday. Bank of Baroda, Canara Bank and Bank of India raised INR 20 billion each through three-month papers. Canara Bank raised the amount at 5.73%, while Bank of Baroda and Bank of India borrowed at 5.75% and 5.78%, respectively. Indian Bank borrowed INR 10 billion through a three-month CD at 5.74%. 

"Banks were active today because they rushed to tap the market now when the rates are still low, and credit offtake will also slowly start picking up now," a dealer at a private sector bank said. "There is still no major requirement for funds as liquidity is comfortable, but there will be internal needs too."

Rates on CPs and CDs were unchanged from Thursday. The indicative rates for three-month CP issued by manufacturing companies were at 5.80-5.85% and the rates for similar maturity papers issued by non-banking financial companies were at 6.15-6.20%. The indicative rates for three-month CDs also remained unchanged at 5.75-5.80%.

In the secondary market, mutual funds and banks were active. Banks were seen buying papers of three- to five-month tenures, dealers said. Mutual funds were likely active on both the buying and selling sides. 

--Primary market

* Indian Oil Corp., Godrej Industries, Godrej Agrovet, Aditya Birla Money and National Bank for Agriculture and Rural Development raised funds through CPs

* Bank of Baroda, Canara Bank, Indian Bank and Bank of India raised funds through CDs

--Secondary market

* Federal Bank's CD maturing Monday was traded twice at a weighted average yield of 5.4044%

* Godrej Agrovet's CP maturing Monday was traded once at a weighted average yield of 5.5018%

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 Saji George Titus

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