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Informist, Tuesday, Dec. 10, 2024

By Sachi Pandey

MUMBAI – Yields on corporate bonds ended steady across tenures in the secondary market Tuesday as volumes remained low amid lack of firm domestic cues, said dealers. "Everyone seems to have already taken their positions, volumes are low and there is nothing new to react to," a fund manager at a large mutual fund house said.

On Tuesday, secondary market deals aggregating to INR 70.42 billion were recorded on the National Stock Exchange and BSE combined, as compared to INR 77.52 billion Monday. Mutual funds were observed selling bonds, while foreign banks were on the buying side, with a few insurance companies also active in the market.

Papers issued by REC Ltd., HDFC Bank, MSRDC Sea Link, State Bank of India, Cholamandalam Investment and Finance Co. Ltd., Power Finance Corp. Ltd., National Bank for Agriculture and Rural Development, Bajaj Finance Ltd., and IIFL Finance Ltd. were traded the most on exchanges Tuesday.

While corporate bonds stayed muted, the government bond market saw some activity after the government appointed Revenue Secretary Sanjay Malhotra as the next governor of the Reserve Bank of India for a period of three years starting Wednesday. Traders welcomed the appointment on the view that Malhotra would favour rate cuts, and placed bets on a 25-basis-point repo rate cut by the Monetary Policy Committee in February.

Consequently, yields on government bonds fell by 2 bps during the day. The yield on the 10-year benchmark 6.79%, 2034 bond ended at 6.7073% Tuesday, as compared to 6.7175% Monday. 

Meanwhile, the primary market was also disappointed Tuesday with the decision of the National Highways Infra Trust to withdraw its plan to raise funds through a 17-year bond issue. According to market experts, the company withdrew the issuance because it was dissatisfied with the 'high' coupon. "NHIT would have expected more attractive levels, but they couldn’t get what they wanted. The demand was also low because they aren’t a frequent issuer, and their bonds don’t trade much in the secondary market," said a dealer from a mid-sized brokerage.

According to a bid book accessed by Informist, the infrastructure trust received only 33 bids worth INR 15.85 billion at a coupon range of 7.15-7.79%. For INR 14 billion, the issuer was getting a bid of 7.47% coupon.

Despite being a government-backed entity, the infrastructure trust failed to attract sufficient demand. "I think there were some concerns regarding the change in management a couple of months ago. After that, demand for the paper has decreased a little," the fund manager at a large mutual fund house quoted earlier said.

Meanwhile, the pipeline for fresh bond issues remains active. On Wednesday, Export-Import Bank of India has invited bids to raise funds for the first time in the current financial year. The Export-Import Bank plans to raise up to INR 25 billion through bonds maturing in five years and seeks bids for the same on Wednesday. 

LIC Housing Finance has also invited bids to raise up to INR 25 billion through bonds maturing on Dec. 11, 2026, while Aditya Birla Housing Finance Ltd. will seek bids to raise up to INR 6 billion through bonds maturing on Mar. 10, 2028. 

Merchant bankers expect several public-sector entities to tap the market this week.

UDAY BONDS

No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market Tuesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

Edited by Rajeev Pai

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