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Informist, Wednesday, Sept. 9, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on short-term debt instruments remained largely steady due to low participation amid surplus liquidity, dealers said. Issuers in need of funds tapped the tri-party repo market, where rates were sharply lower, they said. "No big trades were reported in the secondary market, which kept overall volume on the lower side, even though volume in the CD (certificate of deposit) market rose, and hence rates also remained unchanged, they said.

 

The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.49 trillion Tuesday, up from INR 10.36 trillion Monday. The weighted average tri-party repo rate was 4.59%, little changed from 4.58% Tuesday. 

 

Dealers said banks are looking to raise funds through both shorter- and longer-tenure papers, but most longer-tenure deals are not materialising as mutual funds are locking money in shorter tenures amid high surplus liquidity. Liquidity surplus is unlikely to rise further in the near term due to advance tax outflows due mid-September, and after credit off-take picks up, they said. "Issuers are expecting investors like mutual funds to lock in longer-tenure funding at these rates due to high liquidity, as they expect rates to go up after advance tax outflows," a dealer said. "... credit disbursement will also rise as this is the quarter end, that will drain some liquidity which may push rates higher." Market participants expect issuances to pick up as banks would need funds to meet their quarter-end requirement. 

 

Dealers said CD yields remained unchanged because primary-market activity was subdued. Yields on 'AAA'-rated three-month CDs were at 5.85-5.90% Wednesday, similar to 5.80-5.85% Tuesday. Yields on six-month CDs were at 6.40-6.45%, broadly unchanged from the previous session, while yields on one-year CDs were at 6.90-9.95%, compared to 6.85-9.90% Tuesday. 

 

There were no CD deals reported until near the close, with just one deal reported near the end of the session, dealers said. Though banks including Union Bank of India wanted to issue CDs, the deal did not materialise due to high rate demands, they said. Primary activity in the CD market fell to INR 7.50 billion from INR 74.75 billion Tuesday, according to data from Clearing Corp. of India Ltd. YES Bank was the sole issuer Wednesday, raising INR 7.50 billion at a weighted average yield of 6.18% via a 90-day CD. 

 

In the commercial paper market, primary issuances remained broadly stable compared to the previous session, dealers said. Primary issuances were INR 181.43 billion, up from INR 156.09 billion on Tuesday, according to CCIL data. Yields on 'AAA'-rated three-month CP issued by non-banking financial companies were at 6.50-6.55% Wednesday, against 6.45-6.55% Tuesday. Yields on six-month CP were at 6.85-6.90%, broadly the same as 6.80% Tuesday, while yields on one-year CP were at 7.20-7.30%. 

 

NTPC raised INR 24 billion through a 40-day CP at a weighted average yield of 5.60%,  while Tata Steel raised INR 11 billion through a 57-day CP. Other key issuers included L&T Finance, Godrej Finance, IIFL Finance, Chennai Petroleum Corp., IIFL Home Finance, Indian Oil Corp., and Kotak Securities. 

 

In the secondary market, CD market volume was at INR 136.98 billion Wednesday, up from INR 93.25 billion Tuesday, while the CP market volume fell to INR 74.70 billion from INR 94.05 billion.

 

--Primary market

* YES Bank was the sole issuer of CDs Wednesday.

* NTPC, Tata Steel, L&T Finance, Godrej Finance, IIFL Finance, Chennai Petroleum Corp., IIFL Home Finance, Indian Oil Corp., and Kotak Securities were among key CP issuers Wednesday.  

 

--Secondary market

* HDFC Bank's CD maturing Thursday was traded 10 times at a weighted average yield of 4.69%.
* Kotak Securities's CP maturing Thursday was traded three times at a weighted average yield of 4.72%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
136.98	93.25	74.70	94.05

 

End

 

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

 

Edited by Saji George Titus

 

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