India Corporate Bonds
Ylds steady; US poll outcome, primary mkt in focus
This story was originally published at 20:12 IST on 5 November 2024
Register to read our real-time news.Informist, Tuesday, Nov. 5, 2024
By Ashna Mariam George
MUMBAI – Yields on corporate bonds in the secondary market ended steady across tenures on Tuesday as investors continue to keep an eye on the US presidential election outcome, dealers said. Market participants also remained focused on the primary market activity, dealers said.
"The market was more or less flattish today (Tuesday) with 1 bps (basis points) here and there...we have the result tomorrow (Wednesday), which the market is waiting for," a dealer at a mid-sized brokerage firm said. "Whoever comes into power (as the US president) will focus on fiscal expansion, which might affect our g-sec (government security) and in turn the (corporate) bond market."
The Republican candidate and former president Donald Trump and Democratic nominee and Vice-President Kamala Harris are in a close tie to win the election on Tuesday. Trends in counting are expected to be known early Wednesday as per India time. Market participants believe that regardless of the result, US Treasury yields will head higher in the medium term, although Trump's victory would result in greater volatility.
In the secondary market, mutual funds were active on both the buying and selling sides, dealers said. A handful of public sector banks were active on the buying side and a few foreign banks were on the selling side. Most of the trading took place in shorter maturity segments, dealers said. "We hardly get one or two quotes for longer-tenure papers...pension funds are not aggressively buying, insurance companies are in a wait-and-watch mode, and mutual funds are also not very active for the past few months," a dealer at a mid-sized brokerage firm said. "We might see more activity going forward... November end or December...when we get clarity on rate cuts."
On Tuesday, trade volume fell in the secondary market, with deals worth INR 87.29 billion being recorded on the National Stock Exchange and BSE combined, against INR 100.04 billion on Monday. Papers issued by the National Bank for Agriculture and Rural Development, REC, Power Finance Corp., Cholamandalam Investment And Finance Co., Bharti Telecom, Small Industries Development Bank of India, and Jayaswal Neco Industries were traded the most on the exchanges.
In the primary market, Infrastructure Finance Co. raised INR 23.30 billion through two bonds of different maturities. The company set a coupon of 7.26% on its bonds maturing in 10 years and accepted bids aggregating to INR 15.85 billion. Additionally, the company set a coupon of 7.47% on its bonds maturing in three years, and accepted bids aggregating to INR 7.45 billion. "The cut-off for the bonds was in line with market expectations," a dealer at a mid-sized brokerage firm said.
On Wednesday, REC plans to raise up to INR 65 billion through two bonds of different maturities. The company plans to raise up to INR 30 billion through bonds maturing on Nov. 30, 2039. The company also plans to raise up to INR 35 billion through bonds maturing on Apr. 30, 2030. Market participants said they expect good demand for REC's bond issuances. "The demand is going to be driven by insurance companies and pension funds," the mutual fund dealer quoted above said. "We expect around 7.30-32 levels (coupon of 7.30-7.32%) for the 2030 bonds and around 7.20% for the 15-year one." Citicorp Finance India, Poonawalla Fincorp, Indium Software India, and Indel Money are also in line to tap the market on Wednesday.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Thursday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TUESDAY | MONDAY |
Three-year | 7.49-7.51% | 7.48-7.50% |
Five-year | 7.41-7.45% | 7.42-7.45% |
10-year | 7.22-7.25% | 7.24-7.26% |
End
With inputs from Vaishali Tyagi
Edited by Tanima Banerjee
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