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Informist, Thursday, Jun. 11, 2026

 

By Meera Nair and Vaishali Tyagi

 

MUMBAI – Issuances in the short-term debt market sharply fell Thursday because of subdued investor appetite, dealers said. Redemption pressure on mutual funds, which are major investors in the market, kept them away from the primary market, dealers added. 

 

Certificates of deposit issuance stood at INR 51.75 billion as of 1745 IST, sharply lower than INR 176.60 billion Wednesday, according to data from the Clearing Corp of India Ltd. Only four banks tapped the primary market to raise funds. HDFC Bank, City Union Bank, IDFC FIRST Bank, Punjab and Sind Bank, were the only issuers in the CD primary market. 

 

HDFC Bank raised INR 29.25 billion through a 90-day CD at a weighted average yield of 6.90%. Punjab and Sind raised INR 9.50 billion through a 91-day CD at a weighted average yield of 7.05%. IDFC FIRST Bank raised INR 8 billion through two CD. 

 

Issuance of CPs fell to INR 122.30 billion as of 1737 IST Thursday, compared with INR 240.87 billion Wednesday. Major issuers included Tata Steel, Reliance Retail Ventures, ICICI Securities, National Bank for Agriculture and Rural Development, and Bajaj Financial Securities. Other CP issuers include Indian Oil Corp., Kotak Securities, IIFL Finance, and Birla Group Holdings Pvt. Ltd.

 

Tata Steel raised INR 16 billion through 90-day CPs at a weighted average yield of 7.05%, while Reliance Retail Ventures raised INR 12.50 billion at 7.22%, according to data from the Clearing Corp of India. NABARD raised INR 10.50 billion at 7.28%, while Bajaj Financial Securities raised INR 9.50 billion at 7.82%.

 

Dealers said that yields on certificates of deposit rose sharply Thursday due to risk-off sentiment across markets amid escalating tensions in West Asia following US President Donald Trump's comment Wednesday that the US attacks on military involvement might continue, dealers said.

 

On the yields front, dealers said yields on certificates of deposit rose sharply Thursday as risk-off sentiment hit the short-term debt market. The move followed US President Donald Trump's comment Wednesday that American military involvement in West Asia might continue, stoking fears of an escalating conflict in the region. "The market was expecting quarter-end softness in yields, but concerns over a wider West Asia conflict have changed the sentiment for the worse," a dealer at a private bank said. Trump Wednesday warned that Iran would have to "pay the price" now as it has taken "too long" to reach a peace deal with the US.  

 

In the latest development, Thursday, Trump warned that US forces would be hitting Iran "very hard" in the night and, in the near future, assuming "total control" of Iran's oil and gas markets, just as Washington had done in Venezuela.

 

In the secondary market, yields on AAA-rated CD surged sharply across tenures by 15-30 bps. The AAA-rated three-month CD rose to 7.00-7.05%, up 15 bps from 6.85-6.90% Wednesday. Six-month yields jumped to 7.40-7.45%, up 20 bps from 7.20-7.25% Wednesday, while one-year yields rose the most to 7.60-7.65%, 30 bps higher from 7.30-7.35% Wednesday. The six-month and nine-month segments were most traded Thursday.

 

However, yields on AAA-rated papers issued by non-banking financial companies were range-bound in the three-month and six-month at 7.40-7.45% and 7.55-7.60%, respectively. One-year segment was up slightly at 7.80-7.85%, higher 5 bps from 7.75-7.80% Wednesday.  

 

When asked about the impact of the Reserve Bank of India's Friday norms for a US dollar-rupee swap facility on fresh FCNR(B) deposits, the dealer quoted above said, "We see an inflow of $55-$65 billion from FCNR(B) accounts and segments up to nine-month CD will be more benefited from the latest FCNR(B) measures...if the foreign inflows exceed the market expectations, I think the three-month CD rates can go below 6.80% levels by end of June, considering the fact that brent crude oil prices are stable. The dealer added that despite Thursday's sell-off, RBI's FCNR(B) measures are expected to eventually soften short-term rates.

 

The RBI announced a US dollar-rupee swap facility for fresh FCNR(B) deposits, mobilised for a minimum tenor of three years and maximum tenor of five years. The central bank has allowed banks to price these deposits as per their internal policy, but within the overall regulatory ceiling.

 

In the secondary market, CD trading volume surged to INR 250.40 billion Thursday, from INR 157.35 billion Wednesday, according to CCIL data. CP trading volume also fell to INR 120.90 billion from INR 142.28 billion Wednesday. "Secondary market CD volumes surged as banks actively manage balance-sheet positions ahead of quarter end," the dealer quoted above said.

 

--Primary market
* HDFC Bank, City Union Bank, IDFC FIRST Bank, and Punjab and Sind Bank raised funds via CDs.

* Tata Steel, Reliance Retail Ventures, ICICI Securities, National Bank for Agriculture and Rural Development, and Bajaj Financial Securities were major issuers of CPs. 

 

--Secondary market

* Punjab National Bank's CD maturing Friday was traded 12 times at a weighted average yield of 5.26%
* NABARD's CP maturing Friday was traded nine 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 1811 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Thursday	Wednesday	Thursday	Wednesday
250.40	157.35	120.90	142.28

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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