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Informist, Thursday, Oct. 30, 2025

By Vaishali Tyagi

MUMBAI – Fundraising through certificates of deposit and commercial papers remained subdued on Thursday, with only two issuances as issuers were on the sidelines due to a slight rise in rates amid tight liquidity in the banking system, dealers said. Short-term borrowing rates in three-month maturity segment rose by 3-5 basis points, they said. "A few banks and companies looked to raise funds but struggled to conclude deals as their rate expectations were not matched by investors as they (mostly mutual funds) demanded higher rates," a dealer at a mid-sized brokerage firm said.

The central bank's net absorption from the banking system--a proxy for a surplus--was INR 145.90 billion Wednesday, against 80.84 billion injected on Tuesday, a proxy for deficit in the system.

"Rates rose slightly due to liquidity crunch as many companies are trying to raise funds but only 'AAA' rated companies are getting good quotes (quotations), even rates of 'AA' rated are very high," a dealer at a brokerage firm said.

On Thursday, one sole CP worth INR 5.00 billion was raised. On Thursday, Tata Power Ltd. was the sole CP issuer, raising INR 5 billion through a three-month paper at 6.18%. Wednesday, there was no CP issuance. Rates in the three-month papers issued by manufacturing rose slightly to 6.03-6.14% higher from at 6.00-6.10% from Wednesday. Rates on similar maturity papers issued by non-banking financial companies were at 6.66-6.77%, broadly unchanged from 6.65-6.77% Wednesday.

Due to a rise in rates, most banks refrained from the short-term debt market to raise funds, dealers said. On Thursday, Small Industries Development Bank of India was the lone CD issuer, raising INR 18 billion through paper maturing in one-year at 6.49%. "Some deals were heard from banks but investors were not getting rates as per their want...which turned them (banks) away," the dealer quoted above said. "Also, banks (non-banking financial companies) have other options to raise funds via equities and other various options which in turn led to less CD issuances."

Wednesday, there were just two issuances in the CD market. Union Bank of India raised INR 15 billion through a paper maturing in May at 6.23%, while Indian Bank raised INR 10.00 billion through a similar maturity paper at the same coupon. Indicative rates for three-month CDs were 6.00-6.10%, higher from Wednesday's 5.93-6.03%. Yields on papers with six-month and one-year maturities also remained unchanged at 6.20–6.25% and 6.42–6.47%, respectively.

-Primary market

* Tata Power raised funds through CPs.

* SIDBI raised funds through CDs.

--Secondary market

* ICICI Bank's CD maturing Nov. 15 was traded once at a weighted average yield of 5.8712%.

* Barclays Investments and Loans India Pvt. Ltd.'s CP maturing Friday was traded twice at a weighted average yield of 5.5854%.

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 Akul Nishant Akhoury

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