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Informist, Wednesday, Dec. 18, 2024

By Vaishali Tyagi 

MUMBAI – Yields on corporate bonds in the secondary market remained in a narrow range Wednesday as most market participants flocked to the primary market, dealers said. The movement was also restricted as a few traders abstained from placing large bets ahead of the US Federal Open Market Committee's decision on interest rates early Thursday, dealers said. "There was not much action seen in the secondary market today (Wednesday), some selling and buying was there by mutual funds and few state-owned banks but nothing significant. Infact, people were seen more focused on the primary market," a fund manager at a mid-sized mutual fund house said.

Traders are exercising caution ahead of the US Fed's decision announcement, and everybody is expecting a 25-basis point rate cut, but there is uncertainty over the Fed's future projections and course of action, which is the most awaited thing, dealers said. The US Fed's decision is expected to be announced at 0030 IST on Thursday.

On Wednesday, secondary market deals aggregating to INR 99.64 billion were recorded on the National Stock Exchange and BSE combined, as compared to INR 115.85 billion on Tuesday. A few public sector banks were active selling and buying, dealing in papers maturing in shorter tenures. However, mutual funds were largely active on the selling side, dealers said.  

Papers issued by REC, Housing & Urban Development Corp., HDFC Bank, Indian Railway Finance Corp., Navi Technologies, Keertana Finserv Pvt, LIC Housing Finance, Cholamandalam Investment And Fin. Co., Power Finance Corp, Indiabulls Commercial Credit, National Bank For Agriculture And Rural Development, National Bank For Agriculture And Rural Development were traded the most on exchanges Wednesday. 

Meanwhile, the primary market witnessed robust activity on Wednesday, as state-owned entities and a few private companies tapped the market to raise funds through their bond issuances. The state-owned Punjab & Sind Bank raised INR 30 billion through infrastructure bonds maturing in 10 years at a coupon of 7.74%. "We anticipated a coupon rate of 7.66-7.70%, but it came at 7.74%, slightly above our expectations. However, it's still a very fine level," said a dealer at a mid-sized brokerage firm. According to market participants, pension funds, insurance companies and banks were the major investors in the issue.  

Another state-owned entity, India Infrastructure Finance Co., raised INR 12.90 billion by issuing two bonds of different maturities. The company set a coupon of 7.47% on its bonds maturing on Mar. 20, 2028 and raised INR 7.40 billion via it. Additionally, the company raised INR 5.50 billion through bonds maturing in 10 years at a coupon of 7.35%. According to the bid book accessed by Informist, the bonds maturing on Mar. 20, 2028 garnered 37 bids aggregating to INR 22.20 billion in the coupon range of 7.43-7.65%, while bonds maturing in 10 years garnered 14 bids aggregating to INR 7.50 billion in the coupon range of 7.25-7.45%.

ICICI Prudential Life Insurance Co. raised INR 14 billion through bonds maturing in 10 years, at a fixed coupon of 8.03%. Axis Finance raised INR 3.40 billion via three bond issuances. Toyota Financial Services also tapped the market to raise INR 2 billion through bonds maturing on Dec. 17, 2027.

Market participants believe that there will be a flurry of bond issuances, particularly from state-owned entities, as provident and pension funds rush to meet their investment targets by December and January. "We're expecting a surge in bond issuances in the coming time, as it (bond issuances) typically picks up during this time of the year," a dealer at a mid-sized brokerage firm said. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 219.50 million were traded at a weighted average yield of 7.0049-7.4499%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 100.00 million of Punjab's March 2025 bonds were traded at 7.1047-7.1127%

* INR 72.00 million of Rajasthan's March 2025-2026 were traded at 7.0049-7.1111%

* INR 3.00 million of Rajasthan's June 2026 were traded at 7.2700%

* INR 43.50 million of Haryana's March 2025-2026 bonds were traded at 7.1111-7.4499%

* INR 1.00 million of Telangana's March 2028 bonds were traded at 7.1328%

End

Edited by Deepshikha Bhardwaj

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