India Corporate Bonds
Yields steady; primary market activity in focus
This story was originally published at 19:34 IST on 11 December 2024
Register to read our real-time news.Informist, Wednesday, Dec. 11, 2024
By Ashna Mariam George
MUMBAI – Yields on corporate bonds ended steady in the secondary market Wednesday as activity was concentrated in the primary market, dealers said. The market is also awaiting the primary issuances scheduled for Thursday, they added. "The secondary (market) was quite muted today. Apart from primary, not much action was seen," a fund manager at a mid-sized mutual fund house said.
On Wednesday, secondary market deals aggregating to INR 70.10 billion were recorded on the National Stock Exchange and BSE combined, as compared to INR 70.42 billion on Tuesday. A few public-sector banks were active on both the buying and selling sides, dealing in papers maturing in shorter tenures. However, mutual funds were largely inactive, dealers said.
Paper issued by HDFC Bank, Bank of India, Telangana State Industrial Infrastructure Corp., National Bank for Agriculture and Rural Development, India Infradebt Ltd., LIC Housing Finance Ltd., and SK Finance Ltd. were traded the most on exchanges Wednesday.
The primary market saw robust activity, with multiple issuers raising funds. The state-owned Export-Import Bank of India raised INR 25 billion through unsecured bonds maturing in five years at a coupon of 7.14%. "The coupon was along market expectations, and they got good demand as they came after a long time," a fixed-income fund manager at a mid-sized insurance company, said. According to market participants, pension funds and mutual funds were the major investors in the issue. The state-owned financial institution had last tapped the market in March.
LIC Housing Finance also raised INR 12.75 billion through bonds maturing on Dec. 11, 2026, at a coupon of 7.69%. Aditya Birla Housing Finance raised INR 4.75 billion through bonds maturing on Mar. 10, 2028, at a fixed coupon of 7.8461%.
The primary market will be quite busy Thursday too, with state-backed entities and private-sector financial companies lined up to raise funds. The public-sector Indian Railway Finance Corp. plans to raise INR 30 billion through bonds maturing in 10 years. According to market participants, demand from long-term investors such as the Employees' Provident Fund Organisation and Life Insurance Corp. of India will push the coupon to 7.10-7.15% level. Market participants also said a limited supply of longer-tenure bonds will increase investors' appetite for such issuances.
Big-ticket issuer NABARD will also tap the market Thursday to raise up to INR 70 billion through bonds maturing on Apr. 29, 2030. The issue is expected to get a coupon in the range of 7.38-7.40%, dealers said. "There will be demand from mutual funds, but now everyone is full on NABARD paper, so IRFC might be on the better side," the fixed-income fund manager quoted above said.
L&T Finance Ltd., Nuvama Wealth Finance Ltd., and Ecap Equities Ltd. are also in line to tap the market Thursday with bond issuances.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 242.00 million were traded at a weighted average yield of 7.1391-7.1503%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.
* INR 175.00 million of Punjab's March 2025 bonds were traded at 7.1500%-7.1502%
* INR 50.00 million of Rajasthan's March 2025 bonds were traded at 7.1503%
* INR 15.10 million of Uttar Pradesh's March 2028 bonds were traded at 7.1468%
* INR 1.90 million of Tamil Nadu's February 2031 bonds were traded at 7.1391%
TENURE | WEDNESDAY | TUESDAY |
Three-year | 7.46-7.49% | 7.46-7.48% |
Five-year | 7.39-7.42% | 7.40-7.43% |
10-year | 7.24-7.28% | 7.25-7.29% |
End
Edited by Rajeev Pai
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