India Corporate Bonds
Ylds flat on lack of cues, primary mkt in focus
This story was originally published at 21:29 IST on 27 August 2024
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By Sachi Pandey
MUMBAI – Yields on corporate bonds were largely flat across tenures in the secondary market today as investors flocked to the primary market where big-ticket issuers sought bids for their bonds, dealers said.
Canara Bank tapped the primary market with the first Basel-III compliant tier-I bond issue of this financial year. The state-owned bank raised 30 bln rupees through the issue at a coupon of 8.27%. "They got attractive levels and there was good demand for it. This could set a good benchmark for other banks planning to come with a tier-I bond issue," a director at a mid-sized brokerage firm for fixed income products said.
According to market participants, Canara Bank's issue drew demand mostly from long-term investors such as insurance companies and pension funds. Not many mutual funds participated in the issue, dealers said.
Hindustan Petroleum Corp raised 25 bln rupees through bonds maturing in five years at a coupon of 7.22%. Banks, mutual funds, and insurance companies were said to be the major investors in the issue.
Apart from these big-ticket issues, ICICI Securities Primary Dealership raised 3 bln rupees through Apr 26, 2035 subordinated bonds at a fixed coupon of 8.30% and Sundaram Home Finance raised 2.45 bln rupees through November 2026 bond at a fixed coupon of 7.9123%.
All these issuances were fully subscribed. "The primary (issuances) that were dealt today got taken at fine levels. It shows that there is demand for corporate bonds especially for longer-tenure papers," a dealer at a mid-sized mutual fund said.
Market participants are now eyeing another jumbo bond sale in the primary market, with State Bank of India planning to raise funds on Wednesday. The country's largest lender is all set to hit the market with Basel-III compliant tier-II bonds maturing in 15 years to raise up to 75 bln rupees. Market participants expect the coupon to be between 7.50-7.55%.
Indian Railway Finance Corp is also in queue to raise funds on Wednesday. The company plans to raise up to 30 bln rupees through bonds maturing in 10 years. LIC Housing Finance is in line to tap the market with two bond issuances and raise up to 56 bln rupees. Bajaj Finance will seek bids for reissue of July 2029 bond and plans to raise up to 30 bln rupees.
Apart from these hefty issuances, Manba Finance, 360 One Portfolio Managers, Nuvama Wealth Finance, Keertana Finserv, and Electronica Finance will also borrow from the primary market on Wednesday.
Today, with attention of participants on the primary market and because of minimal domestic cues, activity in the secondary market was muted. "It was not a very active day I would say, but some bit of churning was seen here and there, mostly at the shorter end," a fund manager at a mutual fund house said.
Deals aggregating to 51.09 bln rupees were recorded on the National Stock Exchange and BSE combined, against 83.26 bln rupees on Monday. Insurance companies were said to be buying, while banks and traders were selling. Mutual funds were active on both sides.
Papers issued by National Bank for Agriculture and Rural Development, REC, Power Finance Corp, Uttar Pradesh Power Corp, Kerala Infrastructure Investment Fund Board, Cholamandalam Investment and Finance Co, 360 One Prime, Navi Finserv, and Spandana Sphoorty Financial were traded the most on the exchanges.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 553 mln rupees were traded at a weighted average yield of 7.0797-7.2491%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
* 550 mln rupees of Rajasthan's March 2026 bond was traded at 7.0797%
* 3 mln rupees of Haryana's June 2026 bond was traded at 7.2491%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | MONDAY |
Three-year | 7.56-7.60% | 7.58-7.60% |
Five-year | 7.48-7.51% | 7.50-7.52% |
10-year | 7.38-7.41% | 7.40-7.41% |
End
With inputs from Ashna Mariam George
Edited by Ashish Shirke
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