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Informist, Wednesday, Apr. 23, 2025

By Ashna Mariam George

MUMBAI – Yields on corporate bonds ended steady in the secondary market Wednesday owing to trading being limited to need-based amid low volume, dealers said. During the day, yields were a tad higher, reflecting the movement in government securities, but later reversed the movement, again in tandem with the yields on government bonds, dealers said.

Market participants awaited the minutes of the Reserve Bank of India's Monetary Policy Committee's meeting held in April, which were released after market hours. "MPC minutes will largely be dovish, there is no reason to believe that the minutes will convey anything else but dovishness," a dealer at a mid-sized private sector bank said earlier. "There is nothing much to glean or read from the minutes, so the yields won't move significantly."

The minutes suggest that members of the monetary policy committee are comfortable with inflation, which fell to an over-five-year low of 3.34% in March and are open to further rate cuts. Governor Sanjay Malhotra said, "When consumer price inflation is decisively around its target rate of 4.0% and growth is still moderate and recovering, monetary policy needs to nurture domestic demand impulses to further increase the growth momentum." External member Saugata Bhattacharya said moderate inflation forecasts open up more space for policy easing. Another member, Rajiv Ranjan, said growth is lower than aspirations and needs policy impetus amid a challenging global environment. 

Bond dealers also said they have priced in further repo rate cuts by the rate-setting committee. "The terminal rate is expected to be at 5.5% in the next two meetings, RBI's liquidity support measures show intent to keep rates lower," a fund manager at a mid-sized mutual fund house said. Currently, the RBI's repo rate is at 6.00%.

In the secondary market, deals aggregating INR 113.06 billion were recorded on the National Stock Exchange and BSE combined, down from INR 149.91 billion reported Tuesday. Banks were active on the buying side, while mutual funds were active on both buying and selling side, dealers said.

Bonds issued by the Small Industries Development Bank of India, Apex Homes, LIC Housing Finance, Bajaj Housing Finance, and Power Grid Corp. of India were the most traded on the exchanges. 

In the primary market, the National Housing Bank raised INR 50 billion through seven-year bonds maturing on Apr. 2, 2032 at a coupon of 6.80%. The coupon was lower than market expectation of 6.85-6.90% due to huge demand from long-term investors such as the Employees' Provident Fund Organisation, dealers said. According to the bid book accessed by Informist, the issue received 126 bids aggregating INR 141.25 billion in the coupon range of 6.70-7.00%.

The Indian Railway Finance Corp. has invited bids Thursday to raise up to INR 30 billion through five-year bonds maturing on Apr. 30, 2030. Market participants expect the issue to sail through at a coupon of 6.75-6.80%. 

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market Wednesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Deepshikha Bhardwaj

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