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Informist, Monday, Sept. 28, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on three-month certificates of deposit and commercial papers edged higher on Monday amid weak sentiment in the market, dealers said. Investor sentiment in the short-term debt market soured after yields on government securities rose, with Brent crude topping $108 per barrel and US Treasury yields climbing. However, yields on CPs and CDs beyond the three-month maturity remained broadly unchanged, with only slight movement in the six-month and one-year segments, they said.

 

Crude prices rose as hopes of an imminent agreement between the US and Iran faded after US President Donald Trump rejected Iran's proposal to reopen the Strait of Hormuz, reviving concerns about supply disruptions and global energy supplies. Yields on CPs and CDs also rose due to the weak appetite of mutual funds facing month-end redemption pressures, they said.

 

"Earlier, traders were cautious that short-term debt market instruments would be impacted by liquidity and an impending rate hike and were factoring that in, but now the market is also tracking global yields and the rise in crude," a dealer at a brokerage firm said. "Investors are assessing their options and taking a call depending on the rise in government bond yields and Brent."

 

Yields on AAA-rated three-month CDs margianlly rose to 6.30-6.35% from 6.25-6.30% the previous session, while yields on six-month CDs remained unchanged at 6.87-6.90%. One-year CD yields were at 7.40-7.75%. 

 

Issuers are seeing low demand due to weak investor appetite, dealers said. First, investors are facing redemption pressure, and second, in such a highly volatile environment, issuers are avoiding placing bets as they are waiting for the rate hike to lock in higher-yielding papers. However, the rise in yields is being capped as many participants who generally trade in longer-tenure corporate bonds are now active in short-term maturity papers, they said.

 

Primary issuances of CDs fell significantly to INR 23 billion Monday from INR 113.25 billion Friday, with only three banks issuing CDs. Canara Bank raised INR 15.50 billion through a 29-day CD at a weighted average yield of 5.90%, while UCO Bank borrowed INR 6.50 billion at a yield of 6.34% via a 38-day maturity CD. Federal Bank also tapped the market to raise 1 billion via a 43-day CD. All the CDs issued were below even two-month maturity.

 

Investors are avoiding placing large bets on long-duration debt papets in expectations of a rate hike at the Reserve Bank of India's monetary policy meeting in October. The RBI policy meet will start on Oct. 5, with the outcome due on Oct. 7. "Investors are buying papers in the very short segment to avoid losing out on higher-yielding papers after the rate hike, as everyone is expecting that (a rate hike)," said a dealer at another brokerage firm. 

 

In the CP market, yields on three-month CPs issued by AAA-rated non-banking finance companies rose slightly to 7.00-7.05% Monday from 6.95-7.00% Friday, while six-month CP yields were unchanged at 7.25-7.30%. 

 

Primary issuances in the CP market fell to INR 30.35 billion from INR 61.21 billion Friday, according to Clearing Corp. of India Ltd. data. Bajaj Auto Credit borrowed INR 5 billion via a 70-day CP, while Aditya Birla Capital raised INR 7.50 billion via a CP maturing in 78 days. Other key issuers included Tata Communications, JSW Energy, HDB Financial Services, and ICICI Securities. 

 

In the secondary market, CD volumes fell to INR 68.40 billion from INR 82.35 billion Friday, while CP volumes rose to INR 55.75 billion from INR 52.10 billion. 

 

Going forward, dealers expect CD issuances to pick up once there is clarity on the interest rate front from the RBI, dealers said, adding that they will closely monitor commentary by RBI Governor Sanjay Malhotra on future guidance, especially on the liquidity front. Further, they said that once the redemption pressure on mutual funds eases, issuers' appetite is expected to improve, boosting confidence to bring more supply to meet funding requirements.

 

--Primary market

* Canara Bank, Federal Bank, and UCO Bank issued CDs Monday.

* Bajaj Auto Credit, Aditya Birla Capital, Tata Communications, JSW Energy, HDB Financial Services, and ICICI Securities issued CPs Monday.  

 

--Secondary market

* HDFC Bank's CD maturing Thursday was traded five times at a weighted average yield of 5.85%.
* Hindustan Petroleum Corp.'s CP maturing Tuesday was traded 10 times at a weighted average yield of 5.15%.

 

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
68.40	82.35	55.75	52.10

 

Edited by Avishek Dutta

 

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