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Informist, Thursday, Nov. 14, 2024

By Ashna Mariam George

MUMBAI – Yields on three-year corporate bonds ended slightly higher in the secondary market Thursday, tracking a similar movement in government bond yields, dealers said. "The market is slightly weaker on the sovereign side, so, accordingly, corporate bond yields have moved higher compared to yesterday's (Wednesday's) levels," a dealer at a mid-sized mutual fund house said. "Globally, yields are moving up, so the market is kind of catching the levels."

Yields on government bonds rose around 3 basis points after an overnight rise in US Treasury yields and tepid demand at the weekly gilt auction.

Yields on corporate bonds maturing in five years and 10 years remained steady due to lack of activity, dealers said. "In the corporate bond market, long-term papers, like five-year or plus (maturity of five years or more) are getting hardly dealt, and their true levels are yet to be known," a dealer at a mid-sized brokerage said. "Longer-tenure papers will remain subdued till there is a clarity on rate cuts."

Market participants said papers maturing in shorter tenures will remain in favour as the Reserve Bank of India is expected to start lowering interest rates at some point in the near future.

The activity in the secondary market, however, remained subdued, with deals aggregating to INR 91.49 billion recorded on the National Stock Exchange and BSE combined, compared with 96.39 billion Wednesday. "Banks were in the market today, but not very active... they were in on-and-off participation," a dealer at another mid-sized brokerage said. Most of the activity was concentrated on the shorter segment of the curve, dealers said. Mutual funds were active on both the buying and selling sides, they said.

Paper issued by REC Ltd., HDFC Bank, Equinox India Developments Ltd., LIC Housing Finance Ltd., Cholamandalam Investment and Finance Co. Ltd., Power Finance Corp. Ltd., Federal Bank, Godrej Industries Ltd., National Bank for Agriculture and Rural Development, and Small Industries Development Bank of India were traded the most on the bourses.

Activity in the primary market picked up, with National Housing Bank and DCB Bank raising funds through their respective bond offerings. NHB raised INR 38.30 billion through bonds maturing on Nov. 17, 2034, at a coupon of 7.14%, which was higher than market expectations of 7.05-7.10%. Pension funds, insurance companies, and banks were the major investors in the issue, dealers said.

DCB Bank tapped the market to raise INR 4 billion through unsecured bonds maturing in 10 years at a fixed coupon of 9.20%.

Money markets will be shut Friday for Guru Nanak Jayanti. On Monday, State Bank of India plans to raise up to INR 100 billion through infrastructure bonds maturing in 15 years. On Wednesday, Informist had reported that the bank would tap the bond market next week to raise funds through infrastructure bonds.

Clix Capital Services is also in line to raise INR 1.5 billion through March 2027 bonds.

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:

End

Edited by Rajeev Pai

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