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Informist, Thursday, Dec. 4, 2025

By Vaishali Tyagi

NEW DELHI – Issuances of certificates of deposit and commercial papers remained low Thursday because a majority of borrowers kept to the sidelines as traders remained cautious ahead of the Reserve Bank of India's Monetary Policy Committee decision Friday. Issuances were driven by banks and companies looking to meet their rollover requirements, they said.

Dealers said issuers were also uncomfortable by the slight rise in rates, leading them to avoid raising funds through short-term debt instruments. Selling pressure on short-term debt instruments drove rates slightly higher, with rates on CDs rising more while CP rates were marginally up. 

Traders sold both instruments and unwound their long positions due to slim chances of a rate cut on Friday. After the rupee had hit a record low Thursday, some traders had feared that the RBI's Monetary Policy Committee would refrain from cutting rates Friday to prevent further depreciation in the local currency, dealers said. The Indian currency had fallen due to a delay in finalising the trade deal with the US, dealers said. Some traders said the rupee's fall also indicated that it was pricing in a rate cut. Gilts and overnight indexed swap rates are currently not fully pricing in a 25 basis point rate cut Friday.

"Rates rose today, driven by selling pressure, with most activity concentrated in the one-month maturity segment," a dealer at a brokerage firm said. "Traders had taken positions expecting a rate cut, but those hopes were diminished first by strong GDP data that came last week and now by the weakness in rupee." The rupee closed at 89.9750 a dollar, sharply up from 90.1900 Wednesday.

Traders were more active in CDs Thursday. Some mutual funds, which are major investors in the short-term debt papers, along with banks were active on selling fronts in the secondary market, dealers said. Indicative rates on three-month CDs were 5.98-6.03%, from 5.96-6.02% on Wednesday. Rates on the six-month and the one-year CDs rose to 6.27-6.30% and 6.42–6.46%, respectively. 

In primary market of CDs, two banks together raised INR 75 billion, significantly lower from INR 116.00 billion on Wednesday. Punjab National Bank was the largest CD issuer. The bank raised INR 50 billion through CD maturing in three months at 6.01%. Another state-owned bank, Bank of Baroda raised INR 25 billion through a six-month maturity CD at 6.30%. Dealers said banks that borrowed from the market were mainly meeting their rollover requirements, and the amount was not substantial.

Meanwhile, there was sole CP issuance by Motilal Oswal Financial Services, which raised INR 5 million compared to none on Wednesday. Most companies continued to stay on the sidelines on Thursday due to no immediate funding requirement, dealers said. 

Indicative rates on CPs moved 1-2 basis points up from Wednesday due to selling. Rates on three-month papers issued by manufacturing companies were at 6.03-6.13% Thursday, marginally up from 6.02-6.11%. Rates on papers of similar maturity issued by non-banking finance companies were at 6.65-6.75%, broadly unchanged from Wednesday. Most issuers are keeping a close eye on RBI's Monetary Policy Committee meeting decision Friday. 

--Primary market

* Motilal Oswal Financial Services raise funds through CPs

* Bank of Baroda, Punjab National Bank raised funds through CDs

--Secondary market

* Small Industries Development Bank of India's CD maturing on Friday was traded twelve times at a weighted average yield of 5.3723%

* Grasim Industries's CP maturing Friday was traded thrice at a weighted average yield of 5.3617%

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 Deepshikha Bhardwaj

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