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Informist, Tuesday, Sep 3, 2024

By Vaishali Tyagi and Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market ended steady today as investors refrained from placing large bets due to a lack of fresh domestic cues, dealers said. Instead, they focused on the primary market, they added. 

"The volumes have been subdued for the past few weeks, obviously because there are no fresh cues. People are not taking any fresh positions significantly," a dealer at a mid-sized brokerage firm said. "Both in g-secs (government securities) and corporate bonds we are seeing lower volumes compared to the usual average."

Yields in the fixed-income market moved in tandem with the Indian government bond market, dealers said. Today, yields were steady in government bonds as market participants were in a wait-and-watch mode ahead of the key US data points during the week, dealers said. Release of US data points will lend cues to gauge whether the US Federal Open Market Committee will opt for a 25-basis-point rate cut or a 50-basis-point one at its meeting this month, dealers said. "Probably, guidance from the US Fed will give some clarity to the Indian bond market and may move corporate bond yields," a dealer at a mid-sized mutual fund said. 

According to the CME FedWatch tool, 67% of Fed fund futures traders have priced in a 25-basis-point interest rate cut by the US Federal Open Market Committee, while the remaining 31% have priced in a 50 bps cut.

Mutual funds were active on both the buying and selling sides, while banks were majorly on the buying side, dealers said. Most of the trading activity was seen in shorter tenure notes, and in medium-segments, a dealer at a mid-sized brokerage firm said.

Deals aggregating to 124.82 bln rupees were recorded today on the National Stock Exchange and BSE combined, compared with 59.98 bln rupees on Monday. Papers issued by National Bank For Agriculture And Rural Development, Power Finance Corp, REC, HDFC Bank, Indian Railway Finance Corp, Uttar Pradesh Power Corp, Kerala Infrastructure Investment Fund Board, LIC Housing Finance, Shriram Finance, Cholamandalam Investment And Finance Co, Bajaj Finance, Navi Finserv, Spandana Sphoorty Financial, and HDB Financial Services were traded the most on the exchanges.

In the primary market today, investors remained focused on the issuances by Small Industries Development Bank of India, and Power Finance Corp. SIDBI raised 50 bln rupees through bonds maturing in five years at a yield of 7.47%. Power Finance Corp also tapped the market to raise 27.41 bln rupees through bonds maturing on Oct 16, 2034, at a yield of 7.30%.

"The market was more interested in the primary market issuances today and there was activity in that market," a dealer at a mid-sized brokerage firm said. Insurance companies, banks, and mutual funds were the buyers of SIDBI's five-year bond, while Power Finance Corp's bond saw demand from insurance companies. 

On Friday, Bank of Baroda plans to tap the market to raise up to 50 bln rupees through an infrastructure bond maturing in 10 years. On Aug 26, the state-owned bank raised 50 bln rupees through 10-year infrastructure bond at a coupon of 7.30%.

Dealers said they expect private sector banks such as Axis Bank, and ICICI Bank, to announce bond issues in September. REC might also tap the market in mid-September with capital gains bonds, a dealer at a mid-sized mutual fund said. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 3.31 bln rupees were traded at a weighted average yield of 7.0700-7.2893%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* 2.77 bln rupees of Haryana's June 2025, and March 2025 bonds were traded at 7.0700-7.0701%

* 500 mln rupees of Rajasthan's March 2026 bond was traded at 7.1007%

* 27.02 mln rupees of Tamil Nadu's February 2027, February 2025, and March 2027 bonds were traded at 7.1600-7.2893%

* 16 mln rupees of Uttar Pradesh's June 2026 bond was traded at 7.2028%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj

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