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Informist, Tuesday, Sept. 2, 2025

 

By Shravani Chandiwade

 

MUMBAI – Issuances in the short-term debt market rose sharply Tuesday as banks and companies flocked to the market to fulfil their rollover requirements for the month, dealers said. "As the quarter-end period has started, many companies and banks are seen issuing papers to refill their redemption requirements," a dealer at a state-owned bank said.

 

Total commercial paper issuances rose to INR 141.50 billion Tuesday, from INR 112.00 billion Monday. Reliance Retail Ventures Ltd. was the largest issuer, raising INR 60.00 billion through a three-month paper at 5.93%. The manufacturing company tapped the market to roll over upcoming maturities, dealers said. For September, the company has outstanding CP worth INR 104.25 billion due for maturity. The other major CP issuer was Small Industries Development Bank of India, raising INR 20.00 billion through a one-month paper at 5.80%.

 

Despite the sharp rise in issuances, the indicative rates in the market remained unchanged on account of strong appetite from mutual funds, which are major investors in this market, dealers said. Rates on three-month CP issued by manufacturing companies were at 5.80-5.85% and those issued by non-banking finance companies were at 6.35–6.39%, dealers said. Mutual funds were also seen actively buying paper in the secondary market as the month-end redemption pressure subsided due to inflows of new investments from systematic investment plans, they said.

 

The demand for long-tenure paper in the secondary market was strong on account of reduced expectations of further policy easing from the Reserve Bank of India's Monetary Policy Committee following the GDP data for Apr-Jun, dealers said. The data released last week showed India's GDP growth for Apr-Jun at 7.8%, sharply higher than market expectations of 6.7%, according to an Informist Poll of 17 participants.

 

"In the primary market, MFs were seen investing actively in short-tenure paper," a dealer at a state-owned bank said. However, in the secondary market, demand for long-term paper was high as fund houses were seen selling short-term paper and using the funds to invest in long-term paper, dealers said.

 

In the certificates of deposit market, issuances surged to INR 52.50 billion, from INR 32.00 billion Monday. Total issuances climbed higher Tuesday on the back of big-ticket borrowing by HDFC Bank. The private-sector bank raised a cumulative INR 45.00 billion through two CD of different maturities. The bank raised INR 40.00 billion through a three-month CD at 5.82% and the balance INR 5.00 billion through a one-year paper at 6.38%. 

 

The indicative rates in the CD market also remained steady. Rates on three-month CD were at 5.75%-5.80% and those on six-month CD stayed at 6.05-6.16%. The rates for one-year paper were at 6.30-6.35%.

 

--Primary market

* L&T Finance, Bajaj Finance Securities, Axis Securities, ICICI Securities, Reliance Retail Ventures, Small Industries Development Bank of India, Tata Projects, Indian Oil Corp., HDFC Securities, SBI Capital Securities, IGH Holding, and Aditya Birla Money raised funds through CP

* HDFC Bank and Karur Vysya Bank raised funds through CD

 

--Secondary market

* Bank of Baroda's CD maturing Wednesday was traded six times at a weighted average yield of 5.3211%

* National Bank for Agriculture and Rural Development's CP maturing Wednesday was traded seven times at a weighted average yield of 5.3332%

 

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:

 

Certificates of deposit		Commercial paper
Tuesday	Monday	Tuesday	Monday
83.80	31.75	77.20	26.00

 

End

 

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

 

Edited by Rajeev Pai

 

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