India Corporate Bonds
Yields steady amid extremely low volumes on New Year
This story was originally published at 20:24 IST on 1 January 2025
Register to read our real-time news.Informist, Wednesday, Jan. 1, 2025
By Vaishali Tyagi and Ashna Mariam George
MUMBAI – As the New Year began, corporate bond yields remained steady across all tenures in the secondary market on Wednesday due to muted market participation, dealers said. The market was extremely sluggish, as many participants were on break because of the New Year, they said. "It's the holiday season, starting from Christmas, most people are still on leave," a dealer at a mid-sized brokerage firm said. "We expect market activity to pick up next week as participants are expected to return."
On Wednesday, mutual funds were active on both buying and selling sides, dealing in papers with maturity of less than five years, dealers said. A few banks also bought papers below the five-year segment. "Apart from mutual funds and a few banks, not many participants were there, long-term investors like insurance companies were absent from the market today (Wednesday)," the dealer quoted above said.
The lack of major participation weighed on trade volumes. Volume slipped heavily in the secondary market with deals aggregating to only INR 36.31 billion being recorded on the National Stock Exchange and BSE combined, as against INR 83.35 billion on Tuesday.
Bonds issued by REC, LIC Housing Finance, Axis Finance, HDB Financial Services, Small Industries Development Bank of India, and 360 One Prime were traded the most on exchanges.
The primary market too remained dry on Wednesday with no major deals being reported. On Thursday, Indian Oil Corp. plans to raise up to INR 25 billion through bonds maturing in five years. On Nov. 7, Informist reported exclusively that Indian Oil Corp. is likely to tap the bond market with bonds maturing in five years by the end of December. Market participants expect the coupon to be set in the range of 7.24.7.28%.
Market participants are preparing for a surge in bond issuances in the primary market during the Jan-Mar period. Typically, companies rush to raise funds through bond sales during the last quarter of the financial year to meet their annual targets. "We're expecting a pickup in bond issuances in the last (Jan-Mar) quarter, which could put pressure on yields," another dealer at a mid-sized brokerage firm said.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 800.00 million were traded at a weighted average yield of 7.1201-7.1202%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Monday.
* INR 600.00 million of Haryana's Jun. 15, 2026 bonds were traded at 7.1202%
* INR 200.00 million of Jun. 23, 2026 bonds were traded at 7.1201%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | WEDNESDAY | TUESDAY |
Three-year | 7.53-7.55% | 7.54-7.56% |
Five-year | 7.46-7.49% | 7.47-7.50% |
10-year | 7.23-7.26% | 7.23-7.25% |
End
Edited by Saji George Titus
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