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Informist, Monday, Jul. 6, 2026

 

By Meera Nair

 

MUMBAI – Yields on commercial papers and certificates of deposit rose by 5-10 basis points across most tenors in the secondary market on Monday as a sharp jump in primary commercial paper issuance triggered profit booking by investors, dealers said.

 

The rise in yields came amid ample surplus liquidity in the banking system, which would normally support lower short-term borrowing costs. Dealers said the large volume of fresh commercial paper supply after the start of the new quarter prompted investors to sell existing holdings, particularly in shorter maturities, putting upward pressure on secondary market yields.

 

"The heavy CP issuance has pushed up secondary market yields by around 5-10 basis points. Investors also booked profits on their existing holdings, keeping yields elevated," a dealer at a brokerage firm said.

 

The surplus liquidity in the banking system remained comfortable. The net liquidity absorbed by the Reserve Bank of India, a measure of surplus liquidity, rose to INR 1.85 trillion on Sunday, the highest since Jun. 5. It was INR 1.70 trillion on Saturday and INR 1.68 trillion on Friday.

 

Three-month AAA-rated certificate of deposit yields rose 5 basis points to 6.25-6.30% from 6.20-6.25% on Friday. Six-month yields increased to 6.55-6.60% from 6.50-6.57%, while one-year yields rose to 6.95-7.00% from 6.87-6.95%. "There was more selling in the shorter-tenor papers, while investors preferred buying in the JFM (January-February-March) segment," the brokerage dealer said.

 

According to the dealer, mutual funds remained largely on the sidelines as fresh inflows were limited, while banks accounted for most of the buying and selling activity during the session.

 

In the CP secondary market, yields on three-month AAA-rated papers issued by non-banking finance companies rose around 10 basis points to 6.75-6.80% from 6.65-6.70% on Friday. There were no trades in the six-month and one-year tenure CPs.

 

Activity in the secondary market remained healthy. Certificate of deposit turnover rose to INR 157.20 billion as of 1815 IST from INR 117.90 billion on Friday, according to data from the Clearing Corp. of India Ltd. Commercial paper turnover also increased to INR 62.50 billion by 1815 IST from INR 50.75 billion Friday.

 

In the CD primary market, issuance increased to INR 67.00 billion as of 1750 IST from INR 33.75 billion on Friday. Bank of Baroda, UCO Bank, Indian Bank, IDBI Bank, The Federal Bank, Union Bank of India, Bank of India, and Canara Bank were the only CD issuers Monday. Bank of Baroda raised INR 21.50 billion through 343-day CD at a weighted average yield of 6.87% and UCO Bank raised INR 6 billion through 343-day papers at 7.14%. Indian Bank and Bank of India raised INR 10 billion each at 6.90% and 6.12%, respectively. 

 

Commercial paper issuance, however, surged to INR 269.83 billion as of 1755 IST from INR 61.02 billion on Friday as borrowers returned to the market after the beginning of the new quarter. Major issuers included Bharat Petroleum Corp. Ltd., Indian Oil Corp. Ltd., National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, and NTPC Ltd.

 

Among them, BPCL and NTPC each raised INR 30 billion through 80-day and 91-day papers at weighted average yields of 6.14% and 6.32%, respectively. Indian Oil raised INR 27.25 billion through 81-day papers at 6.11%, while SIDBI raised INR 30 billion through 84-day papers at 6.15%. NABARD raised INR 25 billion through 87-day commercial papers at a weighted average yield of 6.40%. 

 

--Primary market
* Bank of Baroda, UCO Bank, Indian Bank, IDBI Bank, The Federal Bank, Union Bank of India, Bank of India, and Canara Bank were the only issuers of CD Monday.   

* Bharat Petroleum Corp. Ltd., Indian Oil Corp. Ltd., NABARD, SIDBI, and NTPC Ltd. were the major issuers of CPs Monday.

 

--Secondary market

* Indian Bank's CD maturing on Jul. 16 was traded once at a weighted average yield of 6.07%
* Bajaj Finance Ltd.'s CP maturing Wednesday was traded two times at a weighted average yield of 6.10%

 

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
Monday	Friday	Monday	Friday
157.20	117.90	62.50	50.75

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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