India Corporate Bonds
Yields tad down across tenures as MFs buy
This story was originally published at 21:35 IST on 25 July 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds fell by 2 to 3 basis points across tenures in the secondary market today as mutual funds actively bought papers to park recently received inflows, dealers said. Corporate bond yields also mirrored government bond yields that eased tracking the overnight indexed swap market, they said.
Demand for short-term sovereign bonds remained robust, taking cues from a sharp fall in short-term US Treasury yields on Wednesday after strong demand for two-year notes at an auction, dealers said. The yield on the 10-year benchmark government security closed at 6.95%, the five-year benchmark closed at 6.86%, while three-year benchmark government security settled at 6.85% today.
"There was activity in 2027 paper as it looks attractive in terms of the corporate spread. Currently, it is around 60-70 bps over government securities," a dealer at a mid-sized brokerage firm said. "Corporate bond market also followed the rally in the g-sec."
The spread between three-year government security paper and benchmark corporate bond was around 77 basis points today.
Dealers said most participants were active in the market today, with banks seen mostly on the selling side. Most of the activity was concentrated in the short-term segment.
"There was liquidity with mutual funds, so they were majorly buying in the market today. "Overall today, deals worth 119.3 bln rupees were recorded on the National Stock Exchange and BSE combined today, against 105.86 bln rupees on Wednesday.
Papers issued by REC, Housing And Urban Development Corp, HDFC Bank, Hella Infra Market, Cholamandalam Investment and Finance Co, Indiabulls Housing Finance, National Bank for Agriculture and Rural Development, Muthoot Capital Services, Navi Finserv, AYE Finance, Uttar Pradesh Power Corporation, Small Industries Development Bank of India, Spandana Sphoorty Financial were traded the most on exchanges today.
The primary market remained dull today with no major issuances recorded. On Wednesday, National Bank for Agriculture and Rural Development and Cholamandalam Investment and Finance raised funds.
However, several housing financiers, non-banking financial institutions, and public sector entities have lined up their bond issuances to raise funds next week. According to merchant bankers, plenty of borrowers will tap the market to raise funds through the corporate debt market in the coming days.
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 | WEDNESDAY |
Three-year | 7.61-7.62% | 7.63-7.64% |
Five-year | 7.55-7.56% | 7.58-7.61% |
10-year | 7.45-7.46% | 7.49-7.50% |
End
Edited by Deepshikha Bhardwaj
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