India Corporate Bonds
Yields steady due to lack of fresh cues; volume up
This story was originally published at 19:43 IST on 16 December 2024
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By Ashna Mariam George
MUMBAI – Yields on corporate bonds in the secondary market ended steady on Monday due to lack of fresh domestic and global triggers, dealers said. "Typically, the second half of December is like this...it is slow also because foreign investors and their representatives are on leave mode (for Christmas)," a dealer at a mid-sized brokerage firm said. "There is also a liquidity crunch (due to tax outflows), so everything is in a slow mode," the dealer added.
On Friday, yields on corporate bonds rose by 3-4 basis points in the secondary market due to mutual funds' redemption pressure on account of advance tax outflows. According to data on the Reserve Bank of India's website, the liquidity surplus narrowed to INR 232.83 billion on Friday from INR 643.11 billion on Thursday.
Market participants expect the current levels on corporate bonds to stay steady for the rest of the week. "Now the levels are somewhat around that of Friday's, and will stay there for a few days, depending on global cues," a dealer at another mid-sized brokerage firm said.
Trade volume in the secondary market rose on Monday, with deals aggregating to INR 55.22 billion being recorded on the National Stock Exchange and BSE combined at 1500 IST, compared to INR 37.22 billion Friday. Banks were active on the buying side, while mutual funds were active on the selling side, dealing in papers maturing in short-tenures, dealers said. "There were hardly any quotes in the longer tenure," a dealer at a mid-sized brokerage firm said.
Bonds issued by Indian Railway Finance Corp., DME Development, National Bank for Agriculture and Rural Development, Bharti Telecom, Small Industries Development Bank of India, Sundaram Finance, HDB Financial Services, Aditya Birla Housing Finance, and Food Corp of India, were traded the most on the exchanges Monday.
Meanwhile, the primary market on Monday saw activity with the Nuclear Power Corp. of India tapping the market after nearly 20 months with a 15-year bond issue. The state-owned entity raised INR 46 billion at a coupon of 7.14%. "Pension funds and EPFO (Employees' Provident Fund Organisation) bid for the issue, but they bid for higher levels, so public sector banks were the major investors," the first dealer said.
On Dec. 11, Informist exclusively reported that the state-owned power giant was planning to come back to the bond market to raise up to INR 46 billion through bonds maturing in 15 years. Informist also reported that market participants expect the bonds to carry a coupon rate in the range of 7.10% to 7.20%.
Hinduja Leyland Finance Ltd. also raised INR 1 billion on Monday, through bonds maturing in five years at a fixed coupon of 8.80%.
On Tuesday, REC Ltd. plans to raise up to INR 65 billion through two bonds. The company plans to raise up to INR 40 billion through bonds maturing on Apr. 30, 2035. The company also plans to raise up to INR 25 billion by re-issuing bonds maturing on Nov. 30, 2039. Market participants expect a coupon of around 7.15% for the fresh issue. "For the 10-year paper, we expect a coupon in 7.13-7.17% levels," the dealer said.
Another state-owned institution, National Housing Bank will also tap the market on Tuesday to raise up to INR 40 billion through its unsecured bonds maturing on Oct. 3, 2031. For this issue, market participants expect the coupon to be in the range of 7.10-7.15%.
UDAY BONDS
None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market Monday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
TENURE | MONDAY | FRIDAY |
Three-year | 7.50-7.52% | 7.50-7.52% |
Five-year | 7.42-7.44% | 7.40-7.43% |
10-year | 7.25-7.27% | 7.26-7.29% |
End
Edited by Deepshikha Bhardwaj
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