India Corporate Bonds
Ylds flat ahead of FOMC meet outcome on Fri; volume up
This story was originally published at 21:29 IST on 7 November 2024
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By Sachi Pandey
MUMBAI – Yields in the secondary market of corporate bonds ended flat Thursday as investors refrained from placing aggressive bets ahead of the US Federal Open Market Committee meeting's outcome, dealers said. The FOMC's decision on interest rates will be announced at 0030 IST on Friday.
"Market is waiting for FOMC because they do not have any trigger right now. For the FOMC also market has already priced in 25 bps (basis points) so there won't be any huge movement tomorrow (Friday) either. But if something unexpected happens, like they pause rate cut or cut rates by 50 bps, then the market will of course react," a dealer at a mid-sized brokerage firm said.
Instead of the FOMC outcome, Federal Reserve Chair Jerome Powell's comments after the rate decision would be key to gauge the trajectory of US interest rates, which might reflect on domestic bond markets, dealers said.
In the secondary market of corporate bonds, banks were active selling papers, while insurance companies were active on the buying side, dealers said. Most of the activity was seen on the shorter end of the curve.
Volumes were better today, with deals aggregating to INR 87.44 billion recorded on the National Stock Exchange and BSE combined, compared with INR 42.17 billion only on Wednesday. Papers issued by REC, HDFC Bank, Indian Railway Finance Corporation, LIC Housing Finance, Cholamandalam Investment And Finance Company, Power Finance Corporation, National Bank for Agriculture and Rural Development, Adani Enterprises, Small Industries Development Bank of India, and HDB Financial Services were traded the most on the exchanges.
The primary market of corporate bonds too, was quite today, with only a few non-banking financials tapping the bond market to raise funds. "Overall issuances were slowed down this week, because everyone needed clarity on US elections and now FOMC outcome. So the market is getting stable now and all the events are expected to be positive for market and issuances will also pick up in the meantime," a dealer at a large sized private sector bank said.
Kotak Mahindra Prime Ltd raised INR 5 billion by reissuing two bonds with different maturities, sources told Informist. Both the reissues were fully subscribed. The company set a yield of 7.75% on both the reissuance and raised INR 3.5 billion and INR 1.5 billion through bonds maturing on Oct. 21, 2027, and Aug. 18, 2027 respectively.
On Friday, Federal Bank has invited bids to raise up to INR 15 billion through infrastructure bonds maturing in 10 years. Market participants expect the coupon to range between 7.68-7.75% for the issue.
According to sources, several public sector companies and non-banking financial companies are exploring market rates to raise funds through corporate bonds.
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Wednesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | THURSDAY | WEDNESDAY |
Three-year | 7.47-7.50% | 7.48-7.50% |
Five-year | 7.42-7.45% | 7.43-7.46% |
10-year | 7.21-7.25% | 7.23-7.26% |
End
Edited by Vidhi Verma
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