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Informist, Thursday, Sep 19, 2024

By Ashna Mariam George

MUMBAI – Yields on corporate bonds maturing in five years fell by five to six basis points today in the secondary market after the US Federal Open Market Committee cut the federal funds target range by 50 bps to 4.75-5.00% on Wednesday. 

Dealers said the US Fed cut was higher than the market expectation of a 25 bps rate cut. "The rate cut (by the FOMC) was 25 bps more than the market expectation and that is why the market reacted," a dealer at a large mutual fund house said.

However, market participants said they are not expecting the Reserve Bank of India's Monetary Policy Committee to cut the repo rate at its next meeting in Oct. "We are expecting only a stance change in the December MPC meeting, which will be followed by a 25 bps rate cut in the first quarter of the next financial year (Apr-Jun)," said a fixed income dealer at a large private bank.

In the secondary market today, banks and mutual funds were active on both the buying and selling sides, with most of the activity concentrated on the shorter segment, dealers said.

The yield on the five-year bonds fell also because of the higher outstanding stock and the demand for short-term papers, the mutual fund dealer. Corporate bonds maturing in five years are in more supply than the three-year and 10-year papers, the dealer said.

Trade volume was better today with deals aggregating to 130.79 bln rupees recorded on the National Stock Exchange and BSE combined, compared with 78.42 bln rupees on Tuesday. 

Papers issued by the National Bank for Agriculture and Rural Development, Power Finance Corp, REC, Small Industries Development Bank of India, State Bank of India, Bank of Baroda, HDFC Bank, Indian Bank, LIC Housing Finance, Bajaj Finance, Bajaj Housing Finance, and Jamnagar Utilities Power were traded the most on the exchanges.

Primary market activity, however, remained dull today, with only a few companies tapping the market to raise funds. Aditya Birla Housing Finance raised 1.2 bln rupees by reissuing bonds maturing on Sep 11, 2029, at a yield of 7.97%. 

NABARD and Power Finance Corp are planning big-ticket issuances on Friday. NABARD plans to raise up to 70 bln rupees through bonds maturing on Feb 24, 2028, while Power Finance Corp is planning to raise up to 70 bln rupees through two bonds of different maturities.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to 159.10 mln rupees were traded at a weighted average yield of 7.1715-7.2424%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* 100.00 mln rupees of Tamil Nadu's February 2032 bond was traded at 7.1715%

* 24.00 mln rupees of Rajasthan's March 2025 bond was traded at 7.2052%

* 14.20 mln rupees of Uttar Pradesh's June 2028, and March 2029 bonds were traded at 7.1780-7.1882%

* 11.90 mln rupees of Jharkhand's March 2028 bond was traded at 7.2424%

* 9.00 mln rupees of Haryana's June 2026 bond was traded at 7.2400%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

With inputs from Sachi Pandey

Edited by Saji George Titus and Deepshikha Bhardwaj

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