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Informist, Monday, Jan. 27, 2025

By Vaishali Tyagi 

MUMBAI – Yields on corporate bonds ended steady in the secondary market Monday as most participants limited their activity to meeting basic portfolio requirements ahead of the Union Budget 2025-26 (Apr-Mar), due Saturday, dealers said. "Overall, the budget announcement is likely to bring clarity to the market, and traders are expected to take a more active approach once it is announced," a fund manager at a mid-sized mutual fund house said. 

"We expect fresh bond supply in the primary market post-budget, which may impact yield levels in the secondary market also," the fund manager said.

Market participants are expecting a reduction in government borrowing for 2025-26 (Apr-Mar), from the current INR 14.01 trillion. With longer-tenure government bonds dominating the government's issuance, taking up over 35% of the issuance over the past two years, their spread over the 10-year benchmark gilt may shrink. As a result, investors may turn to the corporate bond market for better returns, potentially driving down yields.

For the better part of the day, yields in the secondary market remained largely steady, although some movement was observed on the downside, impacted by the fall in yield levels in government securities. "Yields ended steady (corporate bonds), but they went down 1-2 basis points during the day due to a substantial fall in yields on g-sec (government securities) that happened during the day." 

Yields on government securities went down as traders expected more open market gilt purchases by the Reserve Bank of India after the weekly statistical supplement on Friday showed that the central bank net bought gilts worth INR 101.75 billion through screen-based buys in the week ended Jan. 17, dealers said. 

In the secondary market on Monday, deals aggregating to INR 89.85 billion were recorded on the National Stock Exchange and BSE combined, against INR 82.99 billion on Friday. Mutual funds and pension funds were both on the buying and selling sides, dealing in paper across maturities. A handful of banks and insurance companies were seen active on the buying side, dealers said. On Monday, activity was seen across the curve, they added.   

Papers issued by Larsen And Toubro, REC, HDFC Bank, Indian Railways Finance Corp. CFMARC Trust-119 Security Receipt, LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Bajaj Housing Finance were traded the most on exchanges. 

On Monday, the primary market witnessed limited bond issuances. Dealers are now holding back, awaiting cues from domestic and international markets before taking fresh positions and deciding on future issuances.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 24.40 million were traded at a weighted average yield of 6.9747-7.0298%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Monday.

* INR 16.90 million of Rajasthan's 2025-2026 bonds were traded at 6.9747-7.0298%

* INR 7.50 million of Haryana's Mar 2026 bonds were traded at 7.0298%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj 

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