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[I] Short-term Debt: Issuances down; traders focus on requirement-based deals

[I] Short-term Debt: Issuances dn; traders on sidelines amid lack of need for funds

Informist, Thursday, Nov. 27, 2025

By Vaishali Tyagi

NEW DELHI – Issuances of certificates of deposit and commercial papers fell Thursday as borrowers kept to the sidelines due to lack of need for funds. Some mutual funds, which are major investors in the short-term debt papers, were active on both buying and selling fronts in the secondary market, dealers said. 

Dealers said issuances also dropped as mutual funds' appetite for investment waned due to redemption pressure. They had heavily invested in debt instruments in the recent days to lock in higher yields, dealers said.

Three banks together raised INR 79 billion via certificates of deposit, marginally lower from INR 85.75 billion on Wednesday. Punjab National Bank was the largest CD issuer. The state-owned lender borrowed INR 45 billion through a three-month paper at 5.87%. Another state-owned lender, Indian Bank, borrowed INR 22 billion by issuing two papers of different maturities. Union Bank of India tapped the market to raise INR 12 billion through a six-month paper at 5.87%. 

Dealers said indicative rates on CDs remained unchanged Thursday after falling 2-3 basis points on Wednesday. Indicative rates on three-month CDs were 5.92-6.01%, marginally down from 5.96-6.02% on Wednesday. Rates on six-month and one-year CDs were steady at 6.20–6.23% and 6.40–6.45%, respectively. "Market is (issuers) holding off on bond issuances, expecting rates to drop post-December policy outcome," a dealer at a brokerage firm said.

Total issuances of commercial papers declined to INR 16 billion on Thursday, sharply lower from INR 37.50 on Wednesday. SBI Capital Securities was the largest issuer. It raised INR 9 billion through a three-month CP at 6.56%. Another issuer was ICICI Securities which issued two papers of different maturities borrowing INR 7 billion. Out of the INR 7 billion, it raised INR 1 billion through CP maturing in January at 6.45% and INR 6 billion through three-month CP at 6.52%. There were no other CP issuers Wednesday.

"Traders were mostly fulfilling their requirements and weren't trading aggressively to book profits...activity slowed down as mutual funds' interest has also dipped," a dealer at a brokerage firm said. "Issuances are expected to be on the lower side for some time." Dealers said CP rates are steady now, but a rate cut could bring them down by 4-5 bps, likely boosting CP issuances.

Indicative rates on CPs remained unchanged Thursday as most of the demand from issuers was easily met by investors. Rates on three-month papers issued by manufacturing companies remained unchanged from Wednesday at 6.03-6.12%. Rates on papers of similar maturity issued by non-banking finance companies were at 6.66-6.76%, also broadly unchanged from Wednesday. 

--Primary market

* ICICI Securities, SBI Capital Securities raised funds through CPs

* Indian Bank, Punjab National Bank, Union Bank raised funds through CDs

--Secondary market

* Bank of India's CD maturing on Friday was traded five times at a weighted average yield of 5.3874%

* Tata Steel's CP maturing Friday was traded four times at a weighted average yield of 5.4028%

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 Vandana Hingorani

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