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Informist, Friday, Dec. 20, 2024

By Ashna Mariam George and Vaishali Tyagi 

MUMBAI – Yields on corporate bonds remained in a narrow range in the secondary market on Friday, as most of the activity was concentrated in the primary market, dealers said. "The secondary market was restricted to a thin range, and the momentum seen in the primary market will be reciprocated there (in the secondary market) soon," a dealer at a mid-sized brokerage firm said. 

Market participants also said they are waiting for more fresh cues after the US Federal Open Market Committee cut the benchmark policy rate by 25 basis points. "Now, there is no specific trigger to start a rally in the market, no more triggers are left as of now," a fund manager at a mid-sized mutual fund house said. "Inflation continues to be in an upward trajectory and going forward everything will be data-dependent."

On Friday, deals aggregating to INR 59.05 billion were recorded on the National Stock Exchange and BSE combined, ascompared to INR 62.67 billion on Thursday. Mutual funds were active on the selling side, while banks were active on the buying side, dealers said. Most of the activity was concentrated in the shorter end of the curve, they added. 

Papers issued by REC, Nuclear Power Corp. of India, National Bank for Agriculture and Rural Development, EARC Trust, Small Industries Development Bank of India, and HDB Financial Services were traded the most on exchanges on Friday.

The primary market, on the other hand, saw robust activity on Friday, with several state-owned and private companies tapping the market to cumulatively raise over INR 135 billion. Power Finance Corp. raised INR 52.45 billion through two bonds of different maturities. The company raised INR 27 billion through bonds maturing Jan. 16, 2040 at a coupon of 7.16%. It also raised INR 25.45 billion through another set of bonds maturing on Jan. 15, 2030 at a coupon of 7.40%. Both the coupons were in line with market expectations, dealers said. Mutual funds and banks were the major investors in the January 2030 bonds, while insurance companies and pension funds were the major investors in the January 2040 bonds, dealers said. 

Another state-owned enterprise, Small Industries Development Bank of India, raised INR 37 billion through bonds maturing on May 24, 2029, at a coupon of 7.48%. "The issue got a more or less fair coupon based on the market levels, and mutual funds and banks were the major investors," said the mutual fund dealer quoted earlier. 

Punjab National Bank also tapped the market on Friday with its first bond issuance this financial year. The bank raised INR 30 billion through Basel-III compliant tier-II bonds maturing in 15 years at a coupon of 7.43%. "Expected levels were around 7.50%, but EPFO (Employees' Provident Fund Organisation) brought it down to 7.43% by being a bit aggressive," a dealer at another brokerage firm said. 

Tata Capital, India Infradebt, and NDR InvIT Trust also raised funds aggregating to INR 15.71 billion on Friday, through their respective bond issuances. 

Market participants are keeping a close eye on the issuances lined up next week, dealers said. Traders expect a flurry of bond issuances, particularly from state-owned entities and non-banking finance companies. On Monday, Housing and Urban Development Corp. will tap the market to raise up to INR 25 billion through bonds maturing in 10 years. State-backed Power Grid Corp. of India also plans to raise up to INR 42.50 billion through bonds maturing in 10 years.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 36.20 million were traded at a weighted average yield of 7.2124-7.2400%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 27.50 million of Haryana's March 2026 bonds were traded at 7.2124%

* INR 8.70 million of Tamil Nadu's February 2026 bonds were traded at 7.2400%

End

Edited by Avishek Dutta

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