India Corporate Bonds
Ylds steady before Budget; primary mkt in focus
This story was originally published at 21:14 IST on 22 July 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds remained steady today as investors avoided placing significant bets ahead of the announcement of the Union Budget for 2024-25 (Apr-Mar), dealers said. Finance Minister Nirmala Sitharaman will present the Budget on Tuesday. The government is expected to continue to focus on fiscal consolidation while announcing measures to boost consumption demand in the economy.
Amid subdued activity in the secondary market, participants shifted their focus to the primary market, where several institutions and non-banking finance companies lined up to raise funds through bond issuances. The primary market saw deals worth over 99 bln rupees.
Power Grid Corp of India was the largest issuer, raising 27.05 bln rupees at a coupon of 7.38% on its bond maturing in 10 years. The company initially planned to raise 28.50 bln rupees through this issuance. Although there was strong demand for the paper, Power Grid Corp did not raise the expected amount as it was unwilling to issue the paper at a higher coupon, a vice-president at a large-sized brokerage firm’s debt capital market division said.
Indian Renewable Energy Development Agency also tapped the market and raised 10.90 bln rupees through bonds maturing on Jul 22, 2039. Housing financiers like Bajaj Housing Finance and LIC Housing Finance also raised over 24 bln rupees cumulatively through two bond reissuances each.
Tata Capital, HDB Financial Services, and Axis Finance also raised funds through their bond offerings.
On Tuesday, Wagholi Estates has invited bids to raise 2.5 bln rupees through bonds maturing on Jan 22, 2027. "The primary market will stay silent for one or two days, and the issuers will analyse the Budget before tapping the market," a dealer at a mid-sized brokerage said.
In the secondary market, players were focused on immediate investment requirements rather than taking additional risks ahead of the Budget. "Market participants are waiting for cues from the Budget, especially focusing on the fiscal deficit figures," a dealer at a mid-sized mutual fund said. "Market participants won't be very surprised if there is not much coming out of the Budget, but it's just the clarification that the market needs about fiscal consolidation and populist measures."
The market has been pricing in a small reduction in the government's borrowing for the current financial year following a sharply higher-than-expected surplus transfer from the Reserve Bank of India. The government may peg its net issuance of dated securities this year at 11.42 trln rupees, lower than the target of 11.75 trln rupees in the Interim Budget, according to respondents in an Informist poll.
Only a few mutual fund houses and banks were active in the short maturity segment, while insurance companies were active trading longer tenure papers, dealers said.
Limited activity kept overall volume subdued, with deals worth only 78.24 bln rupees recorded on the National Stock Exchange and BSE combined, compared with 65.85 bln rupees on Friday.
Bonds issued by REC, Arka Fincap, HDFC Bank, Andhra Pradesh State Beverages Corp, Indiabulls Housing Finance, Uttar Pradesh Power Corp, Spandana Sphoorty Financial, UGRO Capital, and Kerala Infrastructure Investment Fund Board were traded the most across tenures today.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to 9.00 mln rupees were traded at a weighted average yield of 7.2562-7.3906%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching system showed.
* 4.00 mln rupees of Tamil Nadu's Mar 22, 2026, bonds were traded at 7.3906%
* 3.00 mln rupees of Punjab's Mar 30, 2028, bonds were traded at 7.2562%
* 2.00 mln rupees of Himachal Pradesh Feb 28, 2027, bonds were traded at 7.3780%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | FRIDAY |
Three-year | 7.63-7.64% | 7.61-7.62% |
Five-year | 7.59-7.60% | 7.60-7.61% |
10-year | 7.49-7.50% | 7.47-7.50% |
End
Edited by Rajeev Pai
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