More Stories

Informist, Wednesday, Nov. 27, 2024

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds edged higher by 2-3 basis points in the secondary market on Wednesday, driven by selling pressure from mutual funds. As the month-end approaches, mutual funds faced redemption pressure, prompting them to offload their corporate bond holdings, dealers said.  

"Today (Wednesday), mutual fund houses and banks put selling pressure across tenures due to month-end redemption," said a dealer at a mid-sized brokerage firm. "Also, some mutual funds and pension funds sold their holdings to make room for fresh primary issuances, which sent the levels slightly up."

Dealers also said that a few mutual fund houses and pension funds also sold paper across tenures to make space for the upcoming supply in the primary market. However, the yield movement was limited to 2-3 bps. 

In the secondary market, mutual funds were active on selling sides, dealing in papers maturing across tenures, dealers said. A few banks and a handful of insurance companies were also active in the market, trading longer tenure papers, dealers said. In the secondary market, deals worth INR 88.14 billion were recorded on the National Stock Exchange and BSE combined on Wednesday, against INR 112.43 billion on Tuesday. 

Papers issued by National Bank For Agriculture And Rural Development, Tata Capital Housing Finance, Msrdc Sea Link, State Bank of India, LIC Housing Finance, Power Finance Corp, Sammaan Capital, Indiabulls Commercial Credit, Sundaram Finance were traded the most on the exchanges.

On the primary market side, dealers said that the primary market for corporate bonds has witnessed a slight uptick in activity, with a slew of state-owned entities and private companies tapping the market to raise funds. "The primary market is seeing activity, with several high-value bond issuances hitting the market," a dealer at another mid-sized brokerage firm said.

On Wednesday, Bank of India Housing Finance raised INR 50 billion through infrastructure bond maturing in 10 years at a yield of 7.41%. This was the second tranche of infrastructure bonds by the bank in the current financial year. 

Another state-owned lender, Bank of Baroda, also tapped the market to raise INR 35 billion through Basel-III compliant tier-II bonds maturing in 15 years at a yield of 7.41%. Bonds issued by both the state-owned banks were fully subscribed. Merchant bankers expected the coupon on Bank of Baroda's tier-II bonds to be set at around 7.45-7.50%. 

"Demand for both the papers was on expected lines and even the coupon was also on quite fair levels. Mostly, long investors like insurance companies and pension funds were there for these bonds," a dealer at another mid-sized brokerage firm said.

On Thursday, LIC Housing Finance plans to raise up to INR 25 billion through bonds maturing on Oct. 22, 2027.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 3.90 million were traded at a weighted average yield of 7.2598-7.3309%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 2.00 million of Telangana's March 2028 bonds were traded at 7.2598%

* INR 1.90 million of Rajasthan's March 2026 bonds were traded at 7.3309%

End

Edited by Akul Nishant Akhoury

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.