India Corporate Bonds
10-yr ylds tad dn tracking gilts; volume remains low
This story was originally published at 20:45 IST on 25 November 2024
Register to read our real-time news.Informist, Monday, Nov. 25, 2024
By Sachi Pandey
MUMBAI – Following a rise in yields in the previous trading session, yields on 10-year corporate bonds fell by 4 basis points in the secondary market Monday, mirroring the decline in government bond yields, dealers said. Corporate bonds maturing in three and five years, however, remained steady.
Traders attributed the decline in government bond yields to the Maharashtra assembly election results, which suggested policy continuity in India's largest state by economic output. Additionally, the 10-year US Treasury note yield easing to 4.34%, down 5 basis points from its level at 1700 IST Friday, supported the fall in bond yields. The yield on the 10-year benchmark 6.79%, 2034 government bond ended at 6.82% at the time the Indian market closed Monday.
Despite this movement in yields, trading activity in the corporate bonds secondary market remained weak. "G-Sec (government securities) has opened better today, so directionally it is looking that way (yields are down), but there is not enough volume, there is not enough activity," a vice-president of debt capital markets at a large-sized brokerage said.
In the secondary market, mutual fund houses and banks were active as part of their routine trades, dealers said. Overall trade volume remained dull, with deals worth INR 67.32 billion recorded on BSE and the National Stock Exchange combined.
Paper issued by the Kerala Infrastructure Investment Fund Board, National Housing Bank, Small Industries Development Bank of India, Bajaj Finance Ltd., National Bank for Agriculture and Rural Development, Power Finance Corp. Ltd., Cholamandalam Investment and Finance Co. Ltd., State Bank of India, HDFC Bank, and REC Ltd. changed hands the most on bourses Monday.
While the secondary market saw little activity, the primary market was busier. Several companies and financial institutions raised over INR 100 billion through corporate bonds Monday. Among the largest issuers, SIDBI raised INR 49.18 billion through bonds maturing on Jun. 12, 2028, at a coupon of 7.51%. "The level was higher than expected. The general consensus was that the level should be around 7.48-7.49%, but 7.51% was a surprise for the market," a dealer at a mid-sized brokerage said.
Indian Renewable Energy Development Agency Ltd. raised INR 20 billion through bonds maturing in seven years and set a coupon of 7.37%. The issue was fully subscribed. "IREDA cut-off was more or less on expected lines," the dealer added.
On Monday, UltraTech Cement Ltd. tapped the bond market after a gap of more than three years. The country's largest cement company raised INR 10 billion through bonds maturing in 10 years at a coupon of 7.22%. The issue, arranged by YES Bank and Kotak Mahindra Bank, was fully subscribed. "The demand was from insurance companies, pension funds, and banks. The coupon was priced right as they are rare issuers," a merchant banker said. On Tuesday, Informist had exclusively reported that UltraTech Cement was likely to raise INR 10 billion through 10-year bonds on Monday or Tuesday with a T+1 allotment structure.
Apart from these marquee issuers, ICICI Home Finance Co. Ltd., Mindspace Business Parks REIT, Century Joint Developments Pvt. Ltd., and Ashoka Buildcon Ltd. also raised funds through bond offerings.
On Tuesday, Utkarsh Small Finance Bank has invited bids to raise up to INR 2 billion through tier-II bonds maturing in seven years. Ecobox Industrials Asset I Pvt. Ltd. will also seek bids to raise INR 1.35 billion through bonds maturing on Feb. 6, 2029.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Monday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
TENURE | MONDAY | FRIDAY |
Three-year | 7.52-7.54% | 7.51-7.53% |
Five-year | 7.44-7.46% | 7.44-7.46% |
10-year | 7.25-7.27% | 7.29-7.33% |
End
Edited by Rajeev Pai
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