India Corporate Bonds
Ylds on 3-, 5-yr papers dn on SIDBI cut-off cues
This story was originally published at 20:44 IST on 24 September 2024
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By Ashna Mariam George
MUMBAI – Yields on corporate bonds maturing in three years and five years fell slightly today as the cut-off on bonds issued by Small Industries Development Bank of India was below expectations, dealers said. However, yields on 10-year paper stayed steady.
"The cut-off for SIDBI's paper came below market expectations, and the secondary market also followed that downward movement in yields, a dealer at a mid-sized private sector bank said. Aggressive biddings for the issuance from investors pushed the yields down, he added.
The state-owned lender tapped the primary market to raise 80 bln rupees through bonds maturing on Feb 26, 2029, at a coupon of 7.34%, lower than the expectation of 7.35-7.45%. The issue, which garnered major demand from banks and mutual funds, was fully subscribed.
Today, PNB Housing Finance also raised 4 bln rupees through its bond maturing on Jan 24, 2028, at a coupon of 8.24%. The issue was fully subscribed. Apart from SIDBI, and PNB Housing Finance, there were no major issuances in the primary market today.
On Wednesday, Bank of India has invited bids to raise up to 25 bln rupees through what would be its first tier-II bond issue of 2024-25 (Apr-Mar). Market experts believe that Bank of India's 10-year tier-II bond issue could bag a coupon of 7.55-7.60%.
On Sep 12, Informist exclusively reported that Bank of India is likely to raise up to 25 bln rupees through its first Basel-III-compliant tier-II bond issue and may seek bids in two weeks.
In the secondary market of corporate bonds, banks and mutual funds were active on both the buying and selling sides today, with most of the activity concentrated in the shorter segment, dealers said. Insurance companies traded in long tenure papers, they said.
Today, deals aggregating to 121.58 bln rupees were recorded on the National Stock Exchange and BSE combined, compared with 148.3 bln rupees on Monday.
"G-secs (government securities) yields had earlier rallied, but corporate bonds were not moving, but now corporate bonds are doing a little bit of catch-up," a fixed-income fund manager at a mid-sized mutual fund house said.
Papers issued by the National Bank for Agriculture and Rural Development, SIDBI, Power Finance Corp, REC, LIC Housing Finance, HDFC Bank, State Bank of India, Bajaj Finance, Tata Capital, Bharti Telecom, ICICI Home Finance Company, Cholamandalam Investment and Finance Co, and Shriram Finance were traded the most on the exchanges.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to 11.30 mln rupees were traded at a weighted average yield of 7.1430-7.1685%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
* 4.50 mln rupees of Rajasthan's March 2026 bond was traded at 7.1430%
* 3.80 mln rupees of Uttar Pradesh's March 2030 bond was traded at 7.1481%
* 3.00 mln rupees of Chhattisgarh's March 2029 bond was traded at 7.1685%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | MONDAY |
Three-year | 7.50-7.52% | 7.53-7.56% |
Five-year | 7.36-7.38% | 7.39-7.41% |
10-year | 7.27-7.30% | 7.27-7.31% |
End
Edited by Deepshikha Bhardwaj
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