India Corporate Bonds
Yields flat on lack of significant triggers
This story was originally published at 21:38 IST on 24 July 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds ended steady across tenures today owing to the lack of firm domestic cues and limited activity in the secondary market, dealers said. Market participants are still assessing the Union Budget for 2024-25 (Apr-Mar) though there were not many takeaways for the fixed-income market, they said.
"Currently, the market lacks triggers, and there isn't much happening that could influence yields," said a dealer at a mid-sized brokerage. "Initially, there was uncertainty around the election... and later the focus shifted to the Budget, but neither had a significant impact on the market."
Only mutual funds and banks were buying and selling paper actively today in the secondary market. However, as clarity on the Budget improved, the overall volume picked up with deals worth 105.87 bln rupees recorded on the National Stock Exchange and BSE combined, compared with 46.92 bln rupees on Tuesday.
On Tuesday, Finance Minister Nirmala Sitharaman presented the Budget, which pegs the fiscal deficit for 2024-25 at 4.9% of GDP, against 5.1% projected in the Interim Budget. The government also revised its gross borrowing for the year to 14.01 trln rupees from the Interim Budget's projection of 14.13 trln rupees.
Papers issued by LIC Housing Finance, Muthoot Capital Services, Incred Financial Services, Navi Finserv, Muthoot Finance, Uttar Pradesh Power Corp, Spandana Sphoorty Financial, and Kerala Infrastructure Investment Fund Board were traded the most across tenures.
Traders also shifted their focus to the primary market, where frequent issuers such as National Bank for Agriculture and Rural Development and Cholamandalam Investment and Finance raised funds.
Amid subdued activity in the secondary market, the primary market saw deals worth over 60 bln rupees, compared to 1 bln rupees worth of deals on Budget Day.
NABARD raised 50 bln rupees and was the largest issuer, raising the full amount through reissuance of its Sep 30, 2027, bond at a yield of 7.628%. Cholamandalam Investment and Finance also raised 5 bln rupees at a fixed coupon of 8.50% on bonds maturing in three years.
Godrej Finance tapped the market and raised 2.5 bln rupees through bonds maturing on Nov 25, 2027. Universal Sompo General Insurance Company raised 1.5 bln rupees through 10-year bonds.
On Thursday, Godrej Properties has invited bids to raise up to 13.40 bln rupees through two bonds with different maturities. SATYA MicroCapital also invited bids to raise 2.08 bln rupees through bonds maturing in five years.
In the coming days, several public-sector companies and non-banking finance companies plan to tap the primary market, according to merchant bankers. Dealers expect major activity at the shorter end of the curve.
UDAY BONDS
None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market today, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | TUESDAY |
Three-year | 7.63-7.64% | 7.64-7.65% |
Five-year | 7.58-7.61% | 7.60-7.61% |
10-year | 7.49-7.50% | 7.50-7.51% |
End
Edited by Rajeev Pai
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