India Corporate Bonds
Yields steady; primary market activity in focus
This story was originally published at 20:11 IST on 19 November 2024
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds ended steady across tenures in the secondary market on Tuesday as activity was largely concentrated in the primary market, dealers said.
"Volume was there in the market today (Tuesday) and some portfolio churning happened across the tenures with the least trading in 10-year paper and most in the three-to-five year segment, but nothing significant happened," a dealer at a mid-sized brokerage firm said.
The primary market saw robust activity on Tuesday, with multiple issuers raising funds. Godrej Industries raised INR 10 billion through two unsecured bonds with different maturities. The company raised INR 5 billion through bonds maturing on May. 22, 2028. Separately, it also raised INR 5 billion through bonds maturing on Nov. 22, 2029. Both the issuances were fully subscribed.
Another company, GIC Housing Finance, also raised INR 6 billion through two bonds of different maturities. Sundaram Home Finance also raised INR 3.5 billion on Tuesday, through bonds maturing on Dec. 21, 2029 at a fixed coupon of 7.70%. All of these issuances were fully subscribed
Several companies and financial institutions are in queue to raise funds through primary market issuances on Thursday. Money markets will be shut on Wednesday on account of state Assembly elections in Maharashtra. On Thursday, National Bank for Agriculture and Rural Development plans to raise up to INR 80 billion by reissuing bonds maturing on Feb. 24, 2028. Casablanca Industries will also tap the market on Thursday to raise INR 940 million via six-year bonds.
The secondary market has been lacklustre for a while now due to the absence of fresh cues on interest rates. On this front, the Jul-Sept GDP print due next week is likely to guide the market as any further evidence of slowing growth could tip the scales in favour of rate cuts as early as December. However, odds of a rate cut in the near term have fallen ever since data released last week showed India's headline retail inflation rate jumped to a 14-month high of 6.21% in October.
"There's nothing guiding the corporate bond market, so traders see no ground to make any large bets," a dealer at a mid-sized brokerage firm said.
Dealers also say that escalating tensions between Ukraine and Russia won't directly impact the corporate bond market, although it is a factor that the market has on its radar. "See, we don't see any impact on the corporate bond market from the Ukraine-Russia conflict, but participants are keeping a close eye on it." a dealer at a mid-sized brokerage firm said.
Russian President Vladimir Putin signed a decree on Tuesday, expanding Moscow's use of nuclear weapons. The move comes particularly after the US gave Kyiv permission to use long-range missiles against Russian military targets.
In the secondary market of corporate bonds today, mutual funds and banks were said to be buying and selling paper across the curve. A few insurance companies were seen selling longer tenure papers but that volume was very low. On Tuesday, trade volume in the secondary market of corporate bonds increased, with deals worth INR 79.84 billion being recorded on the National Stock Exchange and BSE combined, against INR 64.19 billion on Monday.
Papers issued by National Bank For Agriculture And Rural Development, REC, Indian Railway Finance Corp., Power Finance Corp., John Deere Financial India, Godrej Industries, SMFG India Credit Co., and HDB Financial Services were traded the most on the exchanges.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Tuesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
TENURE | TUESDAY | MONDAY |
Three-year | 7.48-7.50% | 7.48-7.49% |
Five-year | 7.43-7.45% | 7.42-7.44% |
10-year | 7.24-7.27% | 7.25-7.26% |
End
Edited by Avishek Dutta
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