More Stories

Informist, Thursday, Dec. 19, 2024

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds ended 2-3 basis points higher across tenures in the secondary market after an upward rally in government securities, dealers said. Yields on government securities rose, tracking the rise in the US 10-year Treasury yield to a near seven-month high, dealers said. The yield on the benchmark 10-year US Treasury note rose to 4.54% from 4.41% at 1700 IST Wednesday, dealers said. 

The US Federal Open Market Committee cut the benchmark policy rate by 25 basis points to 4.25-4.50%, which traders had widely priced in. Market sentiment was dampened due to the US Federal Reserve's decision to slow the pace of rate cuts in 2025, after cutting rates by 25 bps on early Thursday, dealers said. The Summary of Economic Projections, released along with the FOMC statement, showed the median Federal Reserve official expects another 50 bps of rate cuts in 2025, against the previous guidance of 100 bps.

"Today's (Thursday) levels are 2-3 basis points above yesterday's (Wednesday), as G-Secs (government securities) are also slightly up following the US Fed policy decision," said a dealer at a mid-sized brokerage firm. "Traders already factored in 25-bps cut, but the market has reacted to the news that the Fed might go for fewer rate cuts in the next year."

Dealers said that the secondary market has been stagnant for some time, lacking fresh cues. "The action is mainly in the primary market, with the secondary market seeing minimal movement, generally within a 2-3 basis point range, which is nothing noteworthy," the first dealer quoted earlier said.

On Thursday, trade volume in the secondary market was down with deals aggregating to INR 62.68 billion were recorded on the National Stock Exchange and BSE combined, as compared to INR 99.64 billion on Wednesday. A few public sector banks were active in buying papers maturing in shorter tenures. However, mutual funds were largely active on the selling side across tenures, dealers said.  

Papers issued by REC, LIC Housing Finance, Power Finance Corp, National Bank For Agriculture And Rural Development, Small Industries Development Bank of India, Vivriti Capital, HDFC Bank, Tata Steel, and Cyqure India Pvt were traded the most on exchanges Wednesday.

The secondary market activity is expected to be subdued on Friday, dealers said. Market participants are keeping a close eye on issuances lined up on Friday, they added. Small Industries Development Bank of India will tap the market to raise up to INR 40 billion through bonds maturing on May 24, 2029. "We are expecting a busy day tomorrow (Friday) as primary market is going to see a good action as many state-backed entities are tapping the market to raise funds," a dealer at another mid-sized brokerage firm said.

State-owned Punjab National Bank also plans to raise up to INR 30 billion through Basel-III compliant tier-II bonds maturing in 15 years. On Dec. 12, Informist exclusively reported that the lender was in talks with market participants to raise up to INR 30 billion through Basel-III compliant tier-II bonds maturing in 15 years in the third week of December. Market participants expect the coupon on the bonds to range between 7.25% and 7.30%. "As, PNB's (Punjab National Bank) bond is long term, we can see pension funds, insurance companies and banks to show interest as they are also generally long-term investors," a dealer at a mid-sized brokerage firm said. 

Another state-owned entity, Power Finance Corp. has also invited bids to raise up to INR 60 billion through two bonds of different maturities. The public sector entity plans to raise up to INR 30 billion through bonds maturing on Jan. 16, 2040, and another INR 30 billion through bonds maturing on Jan. 15, 2030. India Infradebt Ltd has also planned to tap the market on Friday to raise up to INR 5 billion through bonds maturing in 10 years.

LIC Housing Finance raised INR 6.05 billion through bonds maturing in 10 years, at a yield of 7.74%. IIFL Finance Ltd raised INR 2.50 billion through bonds maturing on Dec. 20, 2027 at a fixed coupon of 9.90%. 

UDAY BONDS

In the secondary market, Rajasthan's Ujwal DISCOM Assurance Yojana bonds worth INR 3 million, maturing on Jun. 23, 2026, were traded at a weighted average yield of 7.2900%, data from the Reserve Bank of India's Negotiated Dealing System-Order Matching System showed. 

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.