More Stories

Informist, Thursday, Nov. 21, 2024

By Ashna Mariam George

MUMBAI – Yields on three-year corporate bonds rose by 3-4 basis points in the secondary market Thursday due to selling by mutual funds, dealers said. Yields on five-year and 10-year papers ended steady. "Overall, the sentiment is negative, so there is some selling. Plus there are lots of primary issuances coming up, and they (mutual funds) are making space for it," a dealer at a mid-sized brokerage firm said.

While mutual funds were on the selling side in the secondary market, banks were active on the buying side, dealing in papers maturing in shorter tenures, dealers said. Papers issued by National Bank For Agriculture And Rural Development, REC, Indian Railway Finance Corp., State Bank of India, LIC Housing Finance, Power Finance Corp., HDB Financial Services, and Axis Finance were traded the most on the exchanges.

However, trade volume fell in the secondary market of corporate bonds on Thursday with deals worth INR 56.10 billion being recorded on the National Stock Exchange and BSE combined, against INR 79.84 billion on Tuesday.  Money markets were shut on Wednesday on account of state Assembly elections in Maharashtra.

According to market participants, the overall sentiment in the market was weak due to multiple reasons. "People are avoiding huge bets and there is caution because of too many reasons, such as geopolitical issues and caution ahead of growth data (GDP data)," a dealer at a mid-sized pension fund house said. "The RBI (Reserve Bank of India) is very bullish on a robust GDP growth, but all other institutions and reports say growth is slowing down, the market is waiting for the actual data."

According to the RBI bulletin for November, released on Wednesday, RBI's staff have set India's GDP growth in Oct-Dec at 7.6%, 20 bps higher than the central bank's official projection of 7.4%. RBI lowered its forecast for the Jul-Sept GDP growth print from their earlier estimate by 10 basis points to 6.7%. The GDP growth data for Jul-Sep will be released on Nov. 29.

Dealers also said the rise in yields on three-year corporate bonds was due to lack of demand in bidding for bonds reissued by the National Bank for Agriculture and Rural Development. In the primary market on Thursday, NABARD set a yield of 7.48% on the reissuance of its bonds maturing on Feb. 24, 2028, and accepted bids aggregating INR 36.80 billion. The company initially planned to raise INR 80 billion with the issue having a base size of INR 30 billion and a greenshoe option of INR 50 billion. Banks were the major investors in the issue, dealers said.

"The NABARD 2028 (maturing on Feb. 24, 2028) paper did not see enough demand from the market, as there is already enough supply for that maturity...so, the secondary market levels for three-year also rose by 2 basis points compared to previous levels," a dealer at another mid-sized brokerage firm said. Market participants said the coupon was along expected lines, but the issuer could not raise the total amount of INR 80 billion due to tepid demand. 

Apart from the public sector entity, HDB Financial Services raised INR 2 billion on Thursday, through the reissuance of bonds maturing on Jun. 26, 2026. Aditya Birla Finance also tapped the market on Thursday to raise INR 1.95 billion through the reissuance of two bonds of different maturities. Casablanca Industries Pvt. Ltd., and Shrem Infra Invest Pvt. Ltd. also raised funds on Thursday. 

On Friday, LIC Housing Finance will tap the market to raise up to INR 20 billion through the reissuance of bonds maturing on Oct. 18, 2029. Shriram Finance Ltd plans to raise up to INR 1.5 billion on Friday through reissuance of bonds maturing on May. 4, 2026. Namdev Finvest Pvt. Ltd., and Hero Fincorp Ltd., are also in line to tap the market on Friday.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 44.80 million were traded at a weighted average yield of 7.1055-7.5022%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 25.70 million of Rajasthan's March 2026 and June 2026 bonds were traded at 7.3682%-7.5022%

* INR 19.10 million of Uttar Pradesh's March 2028 and March 2030 bonds were traded at 7.1055%–7.2688%

End

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.