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Informist, Monday, Aug 5, 2024

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds fell marginally by 2-3 basis points across tenures in the secondary market today, tracking a similar movement in government bond yields, dealers said. Yields of Indian government bonds fell as US Treasury yields slumped on fears the US may be heading into a recession after recent jobs data came in lower than expected, dealers said.

"See, yields have slipped slightly, tracking the decline in g-sec yields after the US Treasury bled, and we were not even expecting this much effect," a dealer at a mid-sized brokerage firm said. "We don't see anything until monetary policy outcome and people are waiting for it keenly."

The Reserve Bank of India will commence its Monetary Policy Committee meeting on Tuesday.

The yield on the 10-year US benchmark Treasury note fell to 3.76% from 3.98% at the time the Indian market closed on Friday. The US unemployment rate in July rose to a near three-year high of 4.3%, data released Friday showed.

According to the CME FedWatch tool, there is a 92.5% chance of a 50-basis-point cut in the interest rate in the US by September, against only 25 bps priced in last week. Taking cues from the US, the domestic rate-setting panel is likely to change its stance to "neutral" from the current "withdrawal of accommodation", dealers said.

Mutual funds were active in the market, with most of the activity concentrated in the shorter-to medium-term segments of the curve, while insurance companies were active in the longer-tenure papers. Deals aggregating 142.00 bln rupees were recorded on the National Stock Exchange and BSE combined, as against 112.52 bln rupees on Friday. 

Papers issued by the Indian Railway Finance Corp, Hella Infra Market, Provincial Finance And Leasing Co, Keertana Finserv, LIC Housing Finance, Cholamandalam Investment And Finance Co, Power Finance Corp, National Bank For Agriculture And Rural Development, Bajaj Finance, Tata Capital Financial Services, Tata Capital Financial Services, Incred Financial Services, Navi Finserv were exchanged most on bourses today. 

In the primary market, Tata Capital Housing Finance invited bids to raise 11.80 bln rupees through two bond reissuances on Tuesday. Market participants are also keeping an eye on Muthoot Finance, which plans to tap the market by issuing papers maturing on Oct 7, 2027 to raise up to 7 bln rupees. With that, PNB Housing Finance has also planned to tap the market to raise up to 3.5 bln rupees through bonds maturing on Dec 30, 2026.

According to merchant bankers, several state-owned entities, including Canara Bank and a few non-banking financing companies may tap the market. "We are not sure, but we have heard that Canara Bank may come to the market through 'perps' (perpetual bonds) anytime," a dealer at a mid-sized brokerage firm said.

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:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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