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Informist, Tuesday, Dec. 9, 2025

 

By Vaishali Tyagi

 

NEW DELHI – Rates in the short-term debt market settled higher Tuesday due to muted participation by mutual funds, the most active participants in the market, dealers said. There was a slight uptick in borrowing rates as most participants demanded higher rates, deterring some potential issuers from raising funds, dealers said.

 

"Some major issuers looked to raise funds but struggled to conclude deals as their rate expectations were not matched, investors (mostly mutual funds) demanding higher rates," a dealer at a mid-sized brokerage firm said. "We heard names like Reliance Retail Ventures, but the deal was not concluded as they were looking to raise funds somewhere at 6%, but investors were asking for 6.05%."

 

A rise in corporate bond yields also contributed to higher rates in the short-term debt market. Borrowing costs increased as traders scaled back expectations of more repo rate cuts by the Reserve Bank of India, pricing in the current repo of 5.25% as the terminal repo rate, after the Monetary Policy Committee cut the repo by 25 basis points Friday, dealers said. 

 

Dealers said that although banks, manufacturing companies, and non-bank finance companies sought to tap the market to borrow funds, deals were not concluded due to rising borrowing rates, which also contributed to low issuance volumes.

 

Fundraising through commercial papers rose from the previous day, though the overall amount remained on the lower side. Fundraising through CPs rose to INR 37.95 billion Tuesday from INR 26.8 billion raised Monday. Six companies tapped the market, with Export-Import Bank of India being the largest issuer. EXIM Bank raised INR 25 billion through a three-month paper at 5.98%. ICICI Securities raised INR 1.45 billion through a one-month paper at 6.50%. Other major issuers included Bajaj Finance Securities, Pilani Investments and Industries Corp., Kotak Securities, and Kotak Mahindra Prime. 

 

Rates on three-month paper issued by manufacturing companies rose to 6.00-6.20% on Tuesday from Monday's 5.98-6.15%. Rates on paper of similar maturity issued by non-banking finance companies were at 6.55-6.65%, broadly in the same range as on Monday. 

 

Meanwhile, most banks stayed away from both the primary and secondary markets, dealers said. Only one bank issued a certificate of deposit Tuesday, compared to no CDs issued on Monday. Bank of Baroda raised INR 6.0 billion through a one-year CD at 6.5%. Indicative rates on three-month CDs were 5.95-6.00% on Tuesday, up from 5.91-6.00% on Monday. Rates on six-month and one-year CDs were steady at 6.25-6.31% and 6.44–6.50%, respectively. 

 

--Primary market

* Bajaj Finance Securities, Export-Import Bank of India, ICICI Securities, Kotak Securities, Pilani Investments and Industries Corp., and Kotak Mahindra Prime raised funds through CPs

* Bank of Baroda raised funds through CDs

 

--Secondary market

* IDBI Bank's CD maturing Wednesday was traded seven times at a weighted average yield of 5.2591%

* ICICI Securities's CP maturing Wednesday was traded seven times at a weighted average yield of 5.1914%

 

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
75.55	117.70	72.65	62.30

 

End

 

Edited by Saji George Titus

 

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