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Informist, Tuesday, Nov. 26, 2024

By Vaishali Tyagi and Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market remained stable across all maturities Tuesday, as market participants focused on meeting basic portfolio requirements, according to dealers. "There was decent volume in the market today, with some portfolio rebalancing happening across various tenures, mainly in the 2-3 year segment," a dealer at a mid-sized brokerage said. "However, there were no significant trades or yield movements."

In the secondary market, a few mutual funds were active on both the buying and selling sides, while a few banks were on the buying side, dealing in paper maturing in shorter tenures, dealers said. Dealers added that the secondary market has been lacklustre for a while now because of the absence of fresh cues. "Whatever is happening is majorly in the primary market, we do not see much activity in the secondary market, because there is no incentive (in terms of spreads between corporate bond yields and government securities yields)," a dealer at another mid-sized brokerage said.

Market participants also said they are awaiting the minutes of the US Federal Reserve's November monetary policy meeting due Wednesday. Dealers said the minutes are expected to give cues on interest rates going forward.

In the secondary market, overall trade volumes improved Tuesday, with deals worth INR 112.43 billion recorded on the BSE and the National Stock Exchange combined, against INR 67.32 billion Monday. Paper issued by National Bank for Agriculture and Rural Development, HDFC Bank, Indian Railway Finance Corp. Ltd., State Bank of India, HDB Financial Services, TMF Holdings, Tata Projects, and Kotak Mahindra Investments were traded the most on the exchanges.

Dealers said market participants are keeping a close eye on issuances lined up on Wednesday. Bank of Baroda will tap the market to raise up to INR 35 billion through tier-II bonds maturing in 15 years. Informist had exclusively reported on Nov. 18 that Bank of Baroda was likely to raise up to INR 35 billion through its first tier-II bond issue of the current financial year this week, and may seek bids through private placement.

Merchant bankers expect the coupon on Bank of Baroda's tier-II bonds to be set at 7.45-7.50%. "See, public-sector banks generally see good demand... for BoB (Bank of Baroda), I expect long-term investors like insurance companies and pension funds to invest," a dealer at a third mid-sized broking firm said.

Bank of India also plans to raise up to INR 50 billion on Wednesday through infrastructure bonds maturing in 10 years. This is the second tranche of infrastructure bonds by the bank in the current financial year. "There will be good demand for Bank of India infra bonds as investors will definitely want to invest in infrastructure bonds," another dealer at a mid-sized brokerage said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 30.00 million were traded at a weighted average yield of 7.1658%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 30.00 million of Telangana's March 2027 bonds were traded at 7.1658%

End

Edited by Rajeev Pai

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