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Informist, Monday, Sept. 1, 2025

By Shravani Chandiwade

MUMBAI – The short-term debt market volume surged Monday on big-ticket issuances and roll-over requirements for September, dealers said. Issuers rushed to the market to meet their quarter-end funding needs, they said. Mutual funds were also seen actively investing in the debt instruments as the month-end redemption pressure subsided, they said.

"Post GDP data, issuers see no reduction happening in rates anytime soon, hence they are seen borrowing for long-term tenure," a dealer at a state-owned bank said. India's GDP growth for Apr-Jun was sharply higher than market's expectation, which dampened hopes of a rate cut by the Reserve Bank of India's Monetary Policy Committee in 2025, dealers said. Data released Friday showed India's GDP growth for Apr-Jun was at a five-quarter high of 7.8% as against 7.4% a quarter ago. An Informist Poll of 17 economists had seen GDP growth in the June quarter at 6.7%.

On the certificates of deposit front, issuances surged on big-ticket borrowing. Canara Bank and Bank of Baroda cumulatively raised INR 32 billion. Canara Bank raised INR 20 billion through a six-month paper at 6.08%. The public sector lender has INR 57.50 billion worth of CDs due for maturity this month. Bank of Baroda borrowed INR 12 billion through a five-month paper at 6.08%. It has INR 22 billion worth of outstanding CD due for maturity in the month.

The indicative rates in the CD market remained steady. Rates on three-month CD were 5.75%-5.80% and those on six-month CD remained at 6.05-6.16%. The rates for one-year paper were at 6.30-6.35%, dealers said. Dealers said ample surplus liquidity post month-end inflows from government payouts of salary and pensions probably kept most CD issuers on sidelines. However, traders see CD issuances inching higher in the upcoming weeks as more banks are expected to tap the market to meet their quarter-end credit disbursement needs and to roll over their upcoming maturities, dealers said.

In the commercial paper market, issuances rose sharply with non-banking financial institutions and manufacturing companies raising INR 112 billion Monday, up from INR 29.25 billion raised Friday. Bajaj Financial Securities was the largest CP issuer. It raised INR 40 billion through a three-month paper at 6.39%. The other major issuer was National Thermal Power Corp., which raised INR 30 billion through a three-month paper at 5.80%.

Indian Oil Corp. raised INR 12.50 billion through a three-month paper at 5.84%. Dealers said the company likely raised funds to refinance its upcoming maturities this month. The petroleum refining company has total CPs worth INR 197.5 billion due for maturity this month.

The indicative rates in the CP market remained unchanged Monday. Rates on three-month CP issued by manufacturing companies were 5.80-5.85% and those issued by non-banking financial companies were 6.35–6.39%, dealers said. In the secondary market, mutual funds were active on both the buying and selling fronts, dealers said. Mutual fund activity picked up on account of inflows received from new investments, which is usual at the start of every month, dealers said.  

--Primary market

* L&T Finance, Bajaj Finance Securities, Axis Finance, ICICI Securities, NTPC, SIDBI, Cholamandalam Finance, Indian Oil Corp. raised funds through CP

* Bank of Baroda and Canara Bank raised funds through CD

--Secondary market

* Canara Bank's CD maturing Tuesday was traded twice at a weighted average yield of 5.3955%

* Aditya Birla Housing Finance's CP maturing Tuesday was traded four times at a weighted average yield of 5.4046%

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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