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Informist, Wednesday, Sept. 24, 2025

 

By Shravani Chandiwade

 

MUMBAI – Activity in the primary short-term debt market was subdued Wednesday, with only a handful of commercial papers and certificates of deposit being issued. Dealers said most banks and companies have already met their rollover requirements, leaving only demand-driven deals and hence volumes were low.

 

In the commercial paper market, companies tapped the market only to meet immediate funding needs, dealers said. Most had already rolled over their maturing issues by borrowing aggressively the previous week. 

 

Only INR 13.00 billion of CPs were issued Wednesday, down from INR 22.25 billion Tuesday. Larsen & Toubro Finance Ltd. was the only big issuer among non-banking financial companies that tapped the market. The company raised INR 7.50 billion through a three-month CP at 5.85%, whereas Bajaj Financial Securities borrowed a mere INR 500 million through a three-month CP at 6.61%.   

 

Indicative rates on three-month papers issued by manufacturing companies were 5.85–5.90% and those of the same tenure issued by non-banking financial companies were 6.70–6.75%, unchanged from Tuesday. 

 

The certificates of deposit market became active only in the latter part of the day as issuers and investors were not able to come to terms on rates earlier, dealers said. As per latest data from the Reserve Bank of India, the systemic liquidity deficit rose to INR 871.82 billion Tuesday from INR 319.87 billion Monday. The pressure on liquidity is likely due to outflows of goods and services tax and an increase in credit disbursement at the end of the quarter, dealers said.

  

The central bank held a variable rate repo auction for INR 1.50 trillion earlier Wednesday, under which the RBI accepted bids for INR 489.80 billion. After this auction, traders expected banks to tap the CD market actively for funds. However, only Bank of Baroda tapped the CD market. The bank raised INR 17 billion through a five-month CD at 6.13%, and INR 5 billion through another three-month CD at 5.82%. 

 

Overall borrowing from the CD market was low despite the systemic liquidity turning to a deficit. On Sept. 16, the volume raised via CD papers was INR 100 billion as banks borrowed large amounts. After that date, borrowing in the CD market has broadly remained subdued.    

 

Mutual funds, the major investors in CD papers, were said to be facing a shortage of deployable funds Wednesday, dealers said. "Some banks were looking to raise significant amounts, but investors were unwilling to invest such large sums in CD papers," a dealer at a state-owned bank said.

 

Indicative rates on CD papers were unchanged from Tuesday. Rates on the three-month paper were 5.80–5.85% while rates on the six-month paper were 6.10–6.15% and those on the one-year paper were 6.35–6.40%.

 

--Primary market

* L&T, HDFC Securities, and Bajaj Financial Securities raised funds through CPs.

* Bank of Baroda raised funds through CDs.

  

--Secondary market

* Bank of India's CD maturing Friday was traded once at a weighted average yield of 5.7506%.

* Reliance Industries Ltd.'s CP maturing Thursday was traded nine times at a weighted average yield of 5.5630%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
36.95	37.90	78.05	40.15

 

End

 

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

 

Edited by Avishek Dutta

 

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