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Informist, Friday, Jan. 31, 2025

By Vaishali Tyagi 

MUMBAI – Yields on corporate bonds in the secondary market ended the week on a steady note as most participants limited their activity to meeting basic portfolio requirements ahead of the Budget for 2025-26 (Apr-Mar), due on Saturday, dealers said. Traders were cautious ahead of the Budget and refrained from placing any significant bets.

"The upcoming Budget announcement is expected to provide clarity to the market, which will lead to increased activity in corporate bonds as traders will have a more active and clear stance," a fund manager at a mid-sized mutual fund house said. "The market was active today and volume was also higher, but there was no market-moving activity. Instead, demand and supply dynamics balanced each other out, resulting in a no change in yields."

Market participants are eagerly awaiting the government's gross and net borrowing figures for next year. The Budget may cut the government's net borrowing in FY26 to INR 11.20 trillion from INR 11.63 trillion this year, according to an Informist poll. 

With longer-tenure bonds dominating the government's issuances, 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, dealers said. 

In the secondary market on Friday, deals aggregating to INR 167.95 billion were recorded on the National Stock Exchange and BSE combined, against INR 144.83 billion on Thursday. Mutual funds and banks were active on both buying and selling sides, dealing in papers maturing in three-to-five years. 

Papers issued by Larsen And Toubro, REC, HDFC Bank, MSRDC Sea Link, Indian Railway Finance Corp., Keertana Finserv, CFMARC Trust-119 Security Receipt, LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Export Import Bank of India were traded the most on exchanges. 

On Friday, the primary market witnessed limited bond issuances. Mahindra & Mahindra Financial Services raised INR 7.05 billion through bonds maturing on Apr. 28, 2028 at a fixed coupon of 7.8863%. Dealers expect bond issuances to pick up next week.

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Friday, as per the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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