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Informist, Tuesday, Feb. 4, 2025

By Ashna Mariam George 

MUMBAI – The wait-and-see mode ahead of the Reserve Bank of India's Monetary Policy Committee meeting kept the yields on the corporate bonds secondary market steady on Tuesday. After the Union Budget, market participants are now cautious ahead of the monetary policy meeting which is scheduled from Wed-Fri. 

"The market is waiting for a 25-basis-point rate cut and a CRR (cash reserve ratio) cut of another 50 bps to ease liquidity," a fund manager at a mid-sized mutual fund house said. "Everything will be in a cautious mode till that." However, market experts believe that the rate cut may not have a major impact on the corporate bond market as this is already factored in. 

The secondary market recorded deals aggregating to INR 123.40 billion on the National Stock Exchange and BSE combined, against INR 110.78 billion on Monday. While mutual funds, pension companies, and insurance companies were on the buying side, banks were active on the selling side, with activity spread across tenures, dealers said. 

Papers issued by Larsen and Toubro, Silverline Investment And Finance, LIC Housing Finance, Telangana State Industrial Infrastructure Corp., National Bank for Agriculture and Rural Development, Titan Co., Tenshi Pharmaceuticals, Can Fin Homes, Small Industries Development Bank of India, Toyota Financial Services India, Mahindra And Mahindra Financial Services, and Jamnagar Utilities and Power were traded the most on exchanges.

On other hand, the primary market of corporate bonds saw issuances from some marquee issuers. "While the secondary market was flat, activity was seen in the primary market, where there was PFC (Power Finance Corp.) and NaBFID (National Bank for Financing Infrastructure and Development)," a dealer at a mid-sized brokerage firm said. 

NaBFID on Tuesday had invited bids for its bonds maturing on Feb. 3, 2040, and raised INR 50 billion at a coupon of 7.25%. The issue, which bagged a coupon in line with market expectations, saw major demand from banks, insurance companies, and pension funds, dealers said.  

Another public sector entity, Power Finance Corp. raised INR 39.50 billion through two bonds of different maturities. The company raised INR 25.00 billion through bonds maturing Jan. 15, 2035, at a coupon of 7.24%. Banks, insurance companies, and pension funds were the major investors in the issue, dealers said. The cut-off for the issue came along market consensus, they added. 

The public sector entity raised INR 14.50 billion through another set of bonds maturing on Jan. 16, 2045, at a coupon of 7.25%. The coupon for this came higher than market expectation of 7.20% centric levels, as it did not see demand from major long-term investors such as Life Insurance Corp. of India and Employees' Provident Fund Organisation, thereby pushing the coupon higher, multiple dealers said. 

Going ahead, market participants expect more issuers to raise funds through the primary market after the MPC meeting outcome on Friday. "More PSUs (public sector entities) will come post rate-cut clarity," the fund manager quoted above said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 61.60 million were traded at a weighted average yield of 6.4813-9.8729%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Monday.

* INR 42.40 million of Haryana's March 2025 bonds were traded at 7.9619% 

* INR 12.00 million of Madhya Pradesh's March 2030 bonds were traded at 7.1867%

* INR 5.00 million of Telangana's March 2025 bonds were traded at 9.8729% 

* INR 2.20 million of Tamil Nadu's February 2025 bonds were traded at 6.4813% 

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Akul Nishant Akhoury

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