India Corporate Bonds
3-year bond yields tad down on banks' active buying
This story was originally published at 20:45 IST on 11 October 2024
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By Vaishali Tyagi
MUMBAI – Yields on three-year corporate bonds fell 1-2 basis points in the secondary market Friday on significant buying by banks to park their funds, dealers said. Yields on the five-year and 10-year bonds ended the week on a steady note, they said. "Some banks had funds as they were primarily sold in the past few sessions, before and after the Reserve Bank of India's Monetary Policy Committee's meeting outcome, so now they took the opportunity to buy the papers, especially shorter tenure bonds, which they did today (Friday)," a dealer at a mid-sized brokerage firm said.
Dealers said most participants were active in the market Friday, with banks seen mostly on the buying side. Most of the activity was concentrated in the short-term segment.
"Today (Friday), we saw significant trading activity in the 2027 paper, primarily buying demand from banks," a dealer at a mid-sized brokerage firm said. It's nothing new to witness market movement due to portfolio rebalancing by banks and mutual funds. Numerous deals took place today (Friday), yet they had minimal impact on yields."
Also, money managers believe that mutual funds and a few banks actively bought and sold papers in the medium- and long-term segments to churn their portfolios, which sparked activity in the market. Volume in the market remained higher across tenures, with deals aggregating to INR 110.68 billion recorded on the National Stock Exchange and BSE combined, against INR 80.82 billion on Thursday.
Papers issued by the Power Finance Corp., National Bank For Agriculture And Rural Development, Tata Capital Financial Services, Summit Digitel Infrastructure, Small Industries Development Bank of India, Shriram Finance, Power Grid Corp. of India, were traded the most on exchanges.
The primary market remained dull Friday with no major issuances recorded. However, several housing financiers, and non-banking financial institutions may line up their bond issuances to raise funds next week, dealers said. "Let's wait for next week, we are expecting some issuances next week, especially some big non-banking financial companies may raise funds from market" a dealer at a mid-sized brokerage firm said.
UDAY BONDS
In the secondary market, Haryana's Ujwal DISCOM Assurance Yojana bonds worth INR 25 million, maturing on Mar. 31, 2025, were traded at a weighted average yield of 7.1919%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | FRIDAY | THURSDAY |
Three-year | 7.43-7.45% | 7.44-7.47% |
Five-year | 7.34-7.37% | 7.34-7.37% |
10-year | 7.20-7.22% | 7.22-7.24% |
End
Edited by Deepshikha Bhardwaj
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