India Corporate Bonds
Yields steady; primary mkt activity in focus
This story was originally published at 21:32 IST on 20 September 2024
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By Ashna Mariam George
MUMBAI – After falling 5-6 basis points in the five-year segment on Thursday, yields on corporate bonds ended the week on a steady note across tenures in the secondary market today, dealers said. Market participants were mostly focused on the primary market issuances that were lined up today, they said.
The primary market of corporate bonds saw bond deals worth over 120 bln rupees today, with frequent issuers, Power Finance Corp, and National Bank for Agriculture and Rural Development, tapping the market to raise funds.
According to market participants, both the issuances saw major demand from mutual funds and insurance companies. "The demand was good for both the issues, and we saw enough buyers," a dealer at a small-sized brokerage firm said.
Power Finance Corp today raised 67.27 bln rupees through two bonds of different maturities. The government-owned entity raised 35 bln rupees through bonds maturing on Oct 15, 2031, at a coupon of 7.27%. The issue was fully subscribed. The company also raised 32.27 bln rupees through bonds maturing on Oct 15, 2039, at a coupon of 7.22%.
"For PFC (Power Finance Corp) the levels were as per market expectations. The cut-off came in around similar levels which market expected," a dealer at a small private sector bank said.
The other big-ticket issuer, NABARD which initially had plans to raise up to 70 bln rupees, raised only 53.14 bln rupees through bonds maturing on Feb 24, 2028, at a coupon of 7.44%. "There was good demand for the NABARD paper, but it was their prerogative to decide the amount and coupon," the dealer quoted above said.
Several companies and financial institutions are in queue to raise funds through primary market issuances in the coming week as well. On Monday, Aditya Birla Renewables plans to raise up to 25 bln rupees through bonds maturing in three years. Housing and Urban Development Corp has also invited bids on Monday to raise up to 20 bln rupees by issuing bonds maturing in 10 years.
TVS Credit Services, Hiranandani Financial Services, and Sadbhav Gadag Highway, will also tap the market on Monday to raise funds through their respective bond issuances. Bank of India might also tap the bond market next week to raise up to 25 bln rupees through its 10-year tier-II bond offering.
Secondary market activity, however, remained dull today with yields ending steady. "The cues for rate cuts (repo rate cut by the Reserve Bank of India) have already been discounted in the present yields, and that is why there is not much movement," another dealer at a small public-sector bank said. "The market will see some direction after the Monetary Policy Committee's meeting next month."
Today, banks were mainly active on the selling side, while mutual funds were active on the buying side, trading short-term papers, dealers said. Insurance companies traded longer-tenure papers.
Papers issued by the National Bank for Agriculture and Rural Development, REC, Small Industries Development Bank of India, Food Corp of India, HDFC Bank, Muthoot Fincorp, Aditya Birla Housing Finance, were traded the most on the exchanges.
Today, deals aggregating to 115.75 bln rupees were recorded on the National Stock Exchange and BSE combined, compared with 130.79 bln rupees on Thursday.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to 242.80 mln rupees were traded at a weighted average yield of 7.1882-7.2286%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
* 139.80 mln rupees of Rajasthan's three bonds maturing in 2026 were traded at 7.1961-7.19864%
* 91.50 mln rupees of Haryana's two bonds maturing in 2026 were traded at 7.1962-7.197%
* 6.50 mln rupees of Himachal Pradesh's 2028 bond was traded at 7.1882%
* 5.00 mln rupees of Jammu and Kashmir's 2026 bond was traded at 7.2286%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | THURSDAY |
Three-year | 7.54-7.56% | 7.55-7.57% |
Five-year | 7.39-7.41% | 7.39-7.42% |
10-year | 7.28-7.31% | 7.29-7.33% |
Edited by Aditya Sakorkar
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