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Informist, Tuesday, Aug. 26, 2025

By Vidhushi RajPurohit

MUMBAI – Following the drought in certificates of deposit issuances for two days, Canara Bank's big-ticket borrowing Tuesday led to a surge in fundraising through the instruments. The state-owned lender was the sole CD issuer, and it raised INR 40 billion via a three-month CD at 5.77%.

Other banks continued to remain away from the market, having met their rollover requirements for August, dealers said. The rates on CDs eased slightly to 5.77-5.80% from 5.80%-5.85% on Monday due to the lacklustre activity in the primary market, they said.

In sharp contrast, commercial paper issuances plunged Tuesday following a slight rise in borrowing rates, dealers said. CP issuances fell sharply to INR 18.25 billion, from INR 54.75 billion Monday. Cholamandalam Finance was the top CP issuer, borrowing INR 8 billion through a 10-month paper at 7.08%.

The other major issuers were Axis Securities and ICICI Securities. Axis Securities raised INR 3.50 billion through a three-month paper at 6.39% and ICICI Securities raised INR 3 billion through a three-month paper at 6.36%. Some issuers avoided raising funds ahead of Wednesday's holiday for Ganesh Chaturthi, dealers said. 

"It was a quiet day for the market. Not many issuers were there and there is some lack of clarity also in terms of rates, which also kept issuers away for now," a dealer at a state-owned bank said. 

Rates on CPs issued by non-banking financial companies were quoted at 6.25-6.28%, slightly higher than 6.20-6.25% on Monday. The borrowing rates inched higher as mutual funds, which are the major investors in the market, were facing some cash crunch due to the month-end redemption pressures, dealers said.

"Rates picked up because MFs' redemption has started, and plus overall in the government bonds market we are seeing prices falling," a dealer at a brokerage said. "But the impact is not as prominent as we are seeing on corp bonds, because issuers here (in the short-term debt market) are not that active right now."

Intraday, yields on government bonds rose due to poor demand at the state bond auction Tuesday. The Reserve Bank of India set the cut-off yield on Rajasthan's 10-year bond at 7.49%, sharply higher than the median estimate of 7.23-7.26% in an Informist poll for 10-year bonds. Gilt yields have risen sharply after Fitch Ratings affirmed India's sovereign rating at 'BBB-' with a stable outlook, disappointing some traders who had hoped for an upgrade after S&P Global Ratings raised India's rating to 'BBB' from 'BBB-'.

In the secondary market, mutual funds were the most active participants and were seen selling papers with maturities ranging from one to three years, dealers said. Activity in the long-tenure segment was largely subdued as dealers cited poor appetite from mutual funds and uncertainty regarding the future trajectory of borrowing rates, they said.  

--Primary market

* HDFC Securities, Axis Securities, Axis Finance, Godrej Industries, Cholamandalam Investment and Finance and ICICI Securities raised funds through CPs

* Canara Bank raised funds through CDs

--Secondary market

* Canara Bank's CD maturing Sept. 2 was traded once at a weighted average yield of 5.6034%

* ICICI Securities' CP maturing Thursday was traded twice at a weighted average yield of 5.3853%

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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