India Corporate Bonds
Yields flat; primary market activity robust
This story was originally published at 21:39 IST on 16 July 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds ended flat in the secondary market today as market participants avoided placing large bets amid a lack of significant domestic and global triggers. Activity also remained subdued in the secondary market today as domestic financial markets will remain shut on Wednesday on account of Muharram, dealers said.
This led investors to rush to the primary market for Canara Bank's infrastructure bond issuance, dealers said. Today, the primary market saw bond deals worth 166.51 bln rupees. Canara bank was the largest issuer today, raising 100 bln rupees through infrastructure bonds maturing in 10 years at a coupon of 7.40%. The issue was fully subscribed.
"Today's Canara Bank bond was completely absorbed and was well-received by the market, primarily by insurance companies, employees' provident fund organisations, and non-banking financial companies," a dealer at a state-owned bank said.
This has come as several banks are lining up infrastructure bonds to fund their rapidly growing balance sheets. So far in the current financial year, three banks have raised 330 bln rupees through infrastructure bonds.
"Infrastructure bonds continue to be in demand and are expected to be fully subscribed. Bank of India is also issuing a bond on Thursday, which has an 'AA' rating. We anticipate the cut-off rate to be around 7.60%, but if it is issued at 7.50%, it wouldn't be surprising," a fund manager with a mid-sized mutual fund said.
On Thursday, Bank of India has invited bids for its infrastructure bond maturing in 10-years. The state-owned bank plans to raise up to 50 bln rupees through the bond, which is rated 'AA' by India Ratings.
Separately, REC raised 60 bln rupees through two bonds of different maturities. Muthoot Finance raised 4.51 bln rupees through bonds maturing on Jan 18, 2027, while SBFC Finance raised 2 bln rupees through bonds maturing in three years. Merchant bankers expect activity in the primary market to pick up in the near term. "Bank of Maharashtra may also come with an infrastructure bond within a month," a dealer at a mid-sized brokerage said.
In the secondary market, only a few mutual fund houses and banks were active as part of their routine trade, dealers said. Most of the activity was concentrated in the short-term segment. Overall today, deals worth 88.71 bln rupees were recorded on the National Stock Exchange and BSE combined.
Papers issued by National Bank for Agriculture and Rural Development, Aditya Birla Finance, HDFC Bank, Hella Infra Market, Cholamandalam Investment And Fin Corp, Bajaj Finance, Navi Finserv, UGRO Capital, Kerala Infrastructure Investment Fund Board, HDB Financial Services, Food Corp of India were traded the most on exchanges today.
Market participants have some expectation that the Union Budget for 2024-25 (Apr-Mar), which will be presented on Jul 23, may provide some cues to the debt market.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 1.26 bln rupees were traded at a weighted average yield of 7.1800-7.4800%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
* 550.00 mln rupees of Rajasthan's Mar 15, 2026 bonds were traded at 7.3000%
* 453.00 mln rupees of Haryana's 2025-2026 bonds were traded at 7.1800-7.3000%
* 250.00 mln rupees of Madhya Pradesh's Mar 22, 2026 bonds were traded at 7.3000%
* 14.00 mln rupees of Tamil Nadu's 2026-2029 bonds were traded at 7.3763-7.4800%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | MONDAY |
Three-year | 7.65-7.66% | 7.67-7.68% |
Five-year | 7.60-7.61% | 7.60-7.61% |
10-year | 7.49-7.50% | 7.49-7.50% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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