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Informist, Tuesday, Jun. 9, 2026

 

By Meera Nair

 

MUMBAI – Yields on commercial papers and certificates of deposit fell across tenures Tuesday, supported by comfortable liquidity conditions and lower crude oil prices, dealers said. Market sentiment remained positive as mutual funds continued to deploy surplus cash in the CP and CD market, weighing on yields, they said.

 

"Liquidity remains comfortable and mutual funds continue to support demand in the CP-CD market. We expect yields to continue softening at least through the middle of June," a dealer at a brokerage firm said. The net liquidity absorbed by the Reserve Bank of India, an indicator of surplus banking-system liquidity, stood at INR 1.34 trillion Monday, compared with INR 1.66 trillion Sunday, according to RBI data.

 

Dealers said the decline in surplus liquidity was mainly due to outflows of around INR 340 billion towards settlement of the government's weekly bond auction and tax-related payments. Despite the fall, liquidity conditions remained sufficiently comfortable to support demand for short-term debt instruments, they said.

 

In the secondary market, yields on AAA-rated papers fell across tenures by 10-15 bps. The AAA-rated three-month CD fell to 6.90-6.95% on Tuesday from 7.07%-7.09% Monday. Six-month yields eased to 7.25-7.30% from 7.40-7.42%, while one-year yields declined to 7.35-7.40% from 7.45-7.47%. The December and March maturity segments saw the highest trading activity. Three-month CD yields fell below the 7% mark for the first time since May 18.

 

CD issuance stood at INR 66.65 billion as of 1825 IST, sharply lower than INR 150.01 billion Monday, according to data from the Clearing Corp of India Ltd. HDFC Bank, Punjab National Bank, Central Bank of India, Canara Bank, IDFC First Bank, Axis Bank, and Bank of Baroda were the issuers in the CD primary market. Among major issuers, HDFC Bank raised INR 15.00 billion through 91-day CDs at a weighted average yield of 6.93%. Central Bank of India raised INR 10.00 billion through a 3-month CD at a weighted average yield of 7.07%, while Punjab National Bank raised INR 10.50 billion through a one-month CD at a weighted average yield of 6.25%. 

 

On the CPs side, yields on AAA-rated papers issued by non-banking financial companies declined 15 basis points in the three-month and six-month segments, while one-year yields fell 30 bps. Three-month CP yields eased to 7.40-7.45% from 7.55-7.60% Monday. Six-month yields fell to 7.55-7.60% from 7.80-7.85%, while one-year yields were at 7.75-7.80% from 8.05-8.10%. Yields on one-year CPs dipped below 8% for the first time since May 19.  

 

Issuance of CPs surged to INR 245.68 billion as of 1831 IST Tuesday, compared with INR 130.84 billion Monday. Major issuers included Small Industries Development Bank of India, Indian Oil Corp., HDFC Securities, Kotak Securities, and Tata Teleservices (Maharashtra). Other CP issuers include Tata Capital, SBICAP Securities, ICICI Securities, JM Financial Services, and Avenue Supermarkets. Lower crude oil prices and continued buying by mutual funds pulled CP rates below 8%, leading to higher issuances, dealers said. 

 

SIDBI raised INR 60.00 billion through 91-day CPs at a weighted average yield of 7.24%, while Indian Oil Corp. raised INR 37.00 billion at 6.20%, according to data from the Clearing Corp of India. HDFC Securities raised INR 11.15 billion at 7.89%, while Kotak Securities raised INR 7 billion at 7.85%.

 

In the secondary market, CD trading volume surged to INR 149.60 billion from INR 79.75 billion Monday, according to CCIL data. CP trading volume, however, fell to INR 138.10 billion from INR 158.00 billion Monday.

 

"Usually when there are active trades happening in the primary, the volumes in the secondary market are likely to fall as they (investors) are parking their money in new issues instead of existing ones," the dealer at the brokerage firm said. Some investors, however, stayed away from buying CPs in the secondary market, expecting yields to fall further, the dealer said. 

 

--Primary market
* HDFC Bank, Punjab National Bank, Central Bank of India, Canara Bank, IDFC First Bank, Axis Bank, and Bank of Baroda were among those that raised funds via CDs.

* Indian Oil Corp, Nuvama Wealth and Investment, HDFC Securities, SIDBI, NABARD, SBICAP Securities, Kotak Securities, PNB Housing Finance, Tata Teleservices, Birla Group Holdings, and ICICI Securities were major issuers of CPs. 

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded six times at a weighted average yield of 5.27%
* Export-Import Bank of India's CP maturing Wednesday was traded six times at a weighted average yield of 5.26%

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Tuesday	Monday	Tuesday	Monday
149.60	79.75	138.10	158.00

   

End

 

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

 

Edited by Saji George Titus

 

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