India Corporate Bonds
Lack of firm domestic triggers keep yields steady
This story was originally published at 20:03 IST on 27 December 2024
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By Ashna Mariam George
MUMBAI – Yields on corporate bonds ended the week on a steady note in the secondary market on Friday, owing to a dearth of firm domestic cues, dealers said. During the day, yields moved 1-2 basis points, tracking government securities, but settled at Thursday's level, they added.
"The yields ended more or less the same as yesterday's levels...levels here (corporate bond market) and g-secs (government securities) moved up and came back (to previous closing levels)," a dealer at a mid-sized brokerage firm said. During market hours, yields on the 10-year benchmark government security moved 3-4 bps up due to a sharp fall in the Indian rupee. However, it ended largely steady compared to the previous closing as the result of the weekly gilt auction was on expected lines and the rupee recovered sharply from a record low.
"The g-sec (government securities) are much more liquid, and it can quickly reverse, but corporate bonds are not like that," a fixed-income fund manager at a mid-sized mutual fund house said. "Movement in g-sec was one-sided, therefore, the corporate bond market did not react immediately to it. Unless it is a directional movement, there will not be a one-to-one impact (on corporate bond yields)."
Trade volume picked up in the secondary market due to active participation from mutual funds, dealers said. "There was a bit more activity compared to yesterday due to some buying and selling by mutual funds for month-end redemption," the dealer quoted above said. Mutual funds were buying and selling across tenures. Apart from mutual funds, a few banks were active on the buying side, dealers said.
Deals aggregating to INR 108.99 billion were recorded on the National Stock Exchange and BSE combined, compared with INR 115.85 billion on Thursday. Papers issued by REC, Indian Railways Finance Corp., Power Finance Corp., Punjab National Bank, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, ReNew Wind Energy, IIFL Samasta Finance, Small Industries Development Bank of India, NTPC, and Power Grid Corp. of India, were traded the most on exchanges on Friday.
In the primary market on Friday, Kerala Infrastructure Investment Fund Board Ltd. raised INR 5.0001 billion through bonds maturing in 10 years. The bonds carry a fixed coupon of 9.49%, payable quarterly, and can be redeemed in a staggered manner starting from four years from the date of allotment to 10 years.
Going forward, market participants expect more investor appetite in the primary market. "Demand (for corporate bonds) would be up a lot, but regarding supply we have to wait and watch," a dealer at another mid-sized brokerage firm said.
UDAY BONDS
No Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Friday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | FRIDAY | THURSDAY |
Three-year | 7.56-7.59% | 7.57-7.60% |
Five-year | 7.48-7.50% | 7.48-7.50% |
10-year | 7.23-7.26% | 7.22-7.25% |
End
Edited by Deepshikha Bhardwaj
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