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Informist, Monday, Aug 12, 2024

By Sachi Pandey

MUMBAI – Yields on corporate bonds ended steady in the secondary market today as market participants avoided taking large bets ahead of India's CPI inflation data for July, released after market hours, dealers said. "The activity was low as there was anxiety ahead of CPI", a fixed income fund manager at a large sized pension fund house said. 

Data released post market hours showed India's CPI inflation moderated to a 59-month low of 3.54% in July from 5.08% in June. The retail inflation rate in July was lower than the consensus estimate. According to an Informist poll, inflation was seen at 3.7% in July. Core inflation, which excludes the volatile segments of fuel and food, rose to 3.4% in July from 3.1% a month ago. 

The retail inflation has fallen below the Reserve Bank of India's medium-term target of 4% for the first time in nearly five years, mainly on account of a statistical effect of a high base. Last week, the RBI raised its inflation projection for Jul-Sep by 60 basis points to 4.4% in the monetary policy review.

In the secondary market, few mutual funds and traders were on the selling side, while banks were active on the buying side, dealers said. Limited participation kept trade volume muted. Today, deals worth only 68.91 bln rupees were recorded on the BSE and the National Stock Exchange combined. 

"We did expect some movement since there is a large primary issuance tomorrow, so we thought that there would be buyers interested in filing up those positions in the shorter tenure, but it has proven to be quite a hard sell, the short-term bonds," a debt capital markets assistant vice president at a mid-sized bank said.

The National Bank for Agriculture and Rural Development has announced the re-issuance of its Dec 6, 2029, bonds to raise up to 50 bln rupees on Tuesday.

Papers issued by REC, HDFC Bank, Bajaj Finance, India Infradebt, PNB Housing Finance, NABARD, Cholamandalam Investment and Finance Co, and Hella Infra Market were traded the most today.

Though there was a big primary issuance from National Bank for Financing Infrastructure and Development today, there were no new announcements about primary issuances. "Before the policy there was a lot of supply, so the market is settling down from that for now," a debt capital markets vice president said. 

Today, NaBFID raised 39.11 bln rupees by issuing bonds maturing in 20 years at a coupon of 7.36%. The company's 20-year bond garnered 108 bids worth 103.11 bln rupees on the 7.24-7.58% coupon, according to a bid book accessed by Informist. 

India Infradebt also tapped the bond market today with two bonds. The company raised 7.65 bln rupees through bonds maturing on Oct 29, 2029, at a fixed coupon of 8.00% and 1.50 bln rupees through bonds maturing on Aug 13, 2029 at a coupon of 7.95%. 

Besides NABARD, several non-banking financiers, such as SK Finance, Fedbank Financial Services, Vivriti Capital, Tyger Capital, and Spandana Sphoorty Financial will also tap the market on Tuesday to raise funds through bonds. 

Tata Housing Development will also seek bids for its three-year bond issue to raise 2.25 bln rupees. 

UDAY BONDS

In the secondary market, 100 mln rupees of Telangana's Ujwal DISCOM Assurance Yojana bonds, maturing in March 2030, were traded at a weighted average yield of 7.2900%, data from the RBI's Negotiated Dealing System–Order Matching System showed.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Saji George Titus

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