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Informist, Thursday, Oct. 3, 2024

By Ashna Mariam George

MUMBAI – Despite a rise of 4-5 basis points in government bond yields, the corporate bond market remained more or less quiet Thursday. Yields on corporate bonds in the secondary market ended steady due to absence of any major direct triggers, dealers said.

"On a day when g-sec (government securities) is very volatile, typically we see the corporate bonds taking a back seat," a dealer at a mid-sized private bank said. "Once we get some kind of stability, or once the g-secs settle down, that is when you will see some kind of action in the corporate bond market."

On Thursday, most of the activity was concentrated in the shorter-segment of the market. "Shorter-tenure papers are more attractive now because going forward, the market knows that the rates are going to go down," a dealer at a mid-sized mutual fund house said. The yield curve remains flat because the demand for shorter-tenure papers is met by enough supply, the dealer added.

Market participants expect the corporate bond market to remain largely unaffected by the outcome of the Monetary Policy Committee meeting on Wednesday, dealers said. "We are expecting a status-quo policy which is evenly balanced," the dealer quoted above said. "We definitely do not expect anything on the rate front." The three-day meeting of the Reserve Bank of India's rate-setting committee will begin Monday. 

The overall sentiment, however, improved Thursday with mutual funds active on the buying side while banks were active on the selling side, dealers said. Volumes also picked up in the secondary market with deals aggregating to INR 174.57 billion being recorded on the National Stock Exchange and BSE combined, compared with INR 101.95 billion on Tuesday. Indian financial markets were closed Wednesday for Gandhi Jayanti.

Papers issued by the National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, Power Finance Corp., REC, National Bank for Financing Infrastructure and Development, Punjab National Bank, Reliance Jio Infocomm, Bharti Telecom, and Shriram Finance were traded the most on the exchanges.

The sentiment was positive in the primary market as well Thursday. Several non-banking financial companies tapped the bond market to raise funds. Muthoot Finance raised INR 11 billion through bonds maturing on Oct. 4, 2029, at a fixed coupon of 8.78%. Cholamandalam Investment and Finance Co. raised INR 5 billion through five-year bonds at a fixed coupon of 8.25%.

Kotak Mahindra Prime also tapped the market to raise INR 5.5 billion by issuing two bonds of different maturities. L&T Finance raised INR 3 billion by reissuing two bonds of different maturities.

On Friday, Avanse Financial Services has invited bids to raise up to INR 4.5 billion through a three-year bond. Hinduja Leyland Finance will also tap the market to raise INR 400 million through a 15-year bond. Market experts are now looking forward to primary issuances from banks and public sector companies, who will likely tap the market after the policy decision.

UDAY BONDS

In the secondary market, Tamil Nadu's Ujwal DISCOM Assurance Yojana bonds worth INR 23.60 million, maturing in February 2027, February 2030, and February 2031, were traded at a weighted average yield of 7.1189%-7.1765%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

BENCHMARK LEVELS FOR CORPORATE BONDS: 

End

Edited by Ashish Shirke

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