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Informist, Thursday, Sep 26, 2024

By Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market ended steady today as investors abstained from placing large bets ahead of the release of the central government's borrowing calendar for Oct-Mar, dealers said. 

"The market is waiting for that announcement (on borrowing limit) and if it is less than the current limit (14.01 trln rupees), we will see a rally in both the g-secs (government securities) and the corporate bond market," a dealer at a mid-sized public sector bank said. "The government has shortened the borrowing target in the budget, and the market has already discounted it."

Some sections of the market expected a cut of 100-300 bln rupees in the gross borrowing aim of 14.01 trln rupees this financial year, with the Oct-Mar calendar showing a gross supply of 6.3-6.5 trln rupees. The calendar's tenor-wise weightage may also change slightly, with a higher issuance of short-term bonds and a cutback in the share of bonds maturing above seven years, dealers said.

After market hours, the government released its borrowing calendar which pegged gilt issuances in Oct-Mar at 6.61 trln rupees, sticking to the Budgeted borrowing number.

However, dealers also expect that the fall in yields on corporate bonds across tenures, will continue for some time in the near future. "The corporate bond market was lagging behind the g-secs (government securities), and now it has started capturing the movement," a fixed-income fund manager at a mid-sized mutual fund house said.

In the last few days, yields on corporate bonds fell across tenures in the secondary market by 2-5 basis points, after the US Federal Open Market Committee cut the federal funds target range by 50 bps, and a fall in Indian government bond yields.

However, the market participation today was low as the market was cautious ahead of the borrowing calendar release. In the secondary market of corporate bonds, banks were actively selling shorter-tenure papers, dealers said, while mutual funds were on buying as well as selling sides across tenures. 

Papers issued by the National Bank For Agriculture And Rural Development, REC, Power Finance Corp, Indian Railway Finance Corp, Small Industries Development Bank of India, State Bank of India, LIC Housing Finance, HDFC Bank, Bajaj Finance, and HDB Financial Services were traded the most on the exchanges today.

Today, deals aggregating 160.56 bln rupees were recorded on the National Stock Exchange and BSE combined as against 139.86 bln rupees on Wednesday. 

In the primary market of corporate bonds, LIC Housing Finance today raised 17.30 bln rupees through the reissuance of its bond maturing on Aug 29, 2034, at a coupon of 7.48%. Hero Fincorp also raised 2 bln rupees through its subordinated bond maturing on May 27, 2030, at a fixed coupon of 9.20%. 

On Friday, Santladevi Resorts will tap the market to raise 880 mln rupees through bond maturing on Mar 30, 2028. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to 4.50 mln rupees were traded at a weighted average yield of 7.1438-7.1689%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* 2.00 mln rupees of Punjab's March 2030 bond was traded at 7.1502%

* 1.50 mln rupees of Uttar Pradesh's March 2031 bond was traded at 7.1438%

* 1.00 mln rupees of Himachal Pradesh's February 2027 bond was traded at 7.1689%

BENCHMARK LEVELS FOR CORPORATE BONDS: 

End

Edited by Deepshikha Bhardwaj

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