India Corporate Bonds
Yields steady due to subdued participation, volume up
This story was originally published at 19:33 IST on 26 December 2024
Register to read our real-time news.Informist, Thursday, Dec. 26, 2024
By Ashna Mariam George
MUMBAI – Yields on corporate bonds ended steady across tenures in the secondary market on Thursday due to subdued market participation, dealers said. The market remained dull as many market participants are on Christmas and New Year break, dealers added. "It is holiday time, most people are on leave, and this can continue till January beginning," a dealer at a mid-sized brokerage firm said.
On Thursday, only a few banks and mutual funds were active on both buying and selling sides, dealing in papers with maturity of less than five years, dealers said. "Insurance (companies) and pension (funds) were not there... activity was mostly in the short tenure," the dealer quoted above said.
However, trade volume picked up on Thursday as the deficit in banking system liquidity narrowed on Tuesday. Deals aggregating to INR 115.85 billion were recorded on the National Stock Exchange and BSE combined, compared with INR 72.68 billion on Tuesday. Markets were shut on Wednesday for Christmas.
"The activity was better today (Thursday) compared to the previous day (Tuesday)... there was better demand from banks and corporates as there was much more liquidity," a dealer at another mid-sized brokerage firm said. According to the Reserve Bank of India data, the liquidity deficit was at INR 2.05 trillion on Tuesday, slightly better than INR 2.43 trillion on Monday.
Papers issued by REC, Power Finance Corp., Punjab & Sind Bank, ICICI Prudential Life Insurance Co., HDB Financial Services, and Housing And Urban Development Corp. were traded the most on exchanges on Thursday.
The primary market was dull on Thursday with no major deals being recorded. On Friday, Kerala Infrastructure Investment Fund Board plans to raise up to INR 20 billion through bonds maturing in 10 years.
Going forward, market participants expect more primary market issuances. "There will be a lot of issuances in Q4 (Jan-Mar), because of the PSUs' (public sector undertakings) borrowing requirements," a fixed income dealer at a mid-sized mutual fund house said.
Dealers also expect private companies to issue more bonds in the next quarter. "Corporate bond issuances are going to pick up... NBFC (non-banking financial corporate) issuances will go up because there are several maturities coming, and they want to roll over, also there are funding requirements," a dealer with another mid-sized brokerage firm said.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Thursday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | THURSDAY | TUESDAY |
Three-year | 7.57-7.60% | 7.58-7.60% |
Five-year | 7.48-7.50% | 7.47-7.50% |
10-year | 7.22-7.25% | 7.23-7.25% |
End
Edited by Saji George Titus
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