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Informist, Friday, Aug 9, 2024

By Vaishali Tyagi

MUMBAI – Yields on three-year and five-year corporate bonds rose 2-3 basis points in the secondary market today on selling by banks and mutual funds, dealers said. Yields on 10-year paper ended steady.

"Today, there was profit booking-related selling of shorter tenure paper by mutual fund houses and banks after the RBI (Reserve Bank of India) policy outcome, which was expected," said a dealer at a mid-sized broking firm. "This only led to some activity in 2026 and 2027 paper. We did not see any demand for 2029 or above paper."

On Thursday, the RBI's Monetary Policy Committee voted with a 4-2 majority to keep the policy repo rate unchanged at 6.50%. The committee also decided to maintain its stance of "withdrawal of accommodation" to ensure inflation progressively aligns with its target while supporting growth.

Money managers believe that mutual funds and banks actively sold paper to book profits and churn their portfolios, which sparked some activity in the market. Most of the volumes were concentrated in the short-term segment, while long-tenure papers were barely in demand, dealers said.

Today, the volume in the market remained low, with deals aggregating to 55.26 bln rupees recorded on the National Stock Exchange and BSE combined, against 73.21 bln rupees on Thursday.

Papers that changed hands the most on the bourses included those issued by REC, Tata Capital Housing Finance, HDFC Bank, Andhra Pradesh State Beverages Corp, Keertana Finserv, Matrix Pharma, LIC Housing Finance, Cholamandalam Investment and Finance Co, Power Finance Corp, Hinduja Leyland Finance, Sammaan Capital, Bajaj Finance, Navi Finserv, Uttar Pradesh Power Corp, and HDB Financial Services.

On Monday, many corporations have scheduled two bond issuances each of different maturities. India Infradebt Ltd has invited bids to raise up to 15 bln rupees through two bond issuances. The company plans to raise up to 5 bln rupees through bonds maturing on Aug 13, 2029, and 10 bln rupees through bonds maturing on Oct 29, 2029. Navi Finserv also plans to raise 3.5 bln rupees by issuing two bonds of different maturities. Ecap Equities plans to raise 1.5 bln rupees by also issuing two bonds of different maturities. Apart from these issuances, a few more corporations have invited bids to raise funds, including Hinduja Leyland Finance and Northern Arc.

A few government-backed institutions are lined up to sell bonds next week. National Bank for Agriculture and Rural Development has invited bids to raise up to 50 bln rupees through Dec 2029 bonds. Market participants are closely watching the primary market and expect a flurry of small- to medium-sized corporate bond issuances in the second quarter, a typical period for companies to raise funds, dealers said.

UDAY BONDS

In the secondary market, 22 mln rupees of Rajasthan's Ujwal DISCOM Assurance Yojana bonds, maturing in February 2025, were traded at a weighted average yield of 7.4235%, 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 Rajeev Pai

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