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Informist, Wednesday, Feb. 5, 2025

By Ashna Mariam George 

MUMBAI – A rush from corporates to lock in yields ahead of the Reserve Bank of India's monetary policy on Friday, pushed down yields on short-to-medium-term corporate bonds in the secondary market, dealers said. Yields on corporate bonds maturing in three years and five years fell by around 5-6 basis points, while yields on 10-year paper remained largely steady, they said. 

"This buying was basically anticipating a rate cut and positive commentary from the RBI, they were locking in the current rates," a dealer at a mid-sized brokerage firm said. "These corporates are not regular traders, they come only when they have some fund inflows, or they see an opportunity... they don't negotiate much and the sellers take advantage of it." 

The Monetary Policy Committee is widely expected to cut the policy repo rate by 25 basis points to 6.25% on Friday.

According to multiple dealers, companies from the information technology, manufacturing and fast moving consumer goods sectors were the major buyers of corporate bonds on Wednesday. While a few mutual funds and foreign banks were also on the buying side, banks were on the selling side, with activity spread across tenures, dealers said. 

The secondary market recorded deals aggregating to INR 140.86 billion on the National Stock Exchange and BSE combined, against INR 123.40 billion on Tuesday. Papers issued by Rural Electrification Corp., HDFC Bank, National Highways Infra Trust, LIC Housing Finance, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Export-Import Bank of India, Small Industries Development Bank of India, Rajasthan Rajya Vidyut Prasaran Nigam, and Mahindra & Mahindra Financial Services, were traded the most on exchanges.

Meanwhile, the primary market remained lacklustre on Wednesday. Market participants expect issuances to pick up after the monetary policy.

Market participants said the proposed partial credit enhancement facility to be set up by the National Bank for Financing Infrastructure and Development will help boost the corporate bond market. In the Budget for 2025-26 (Apr-Mar), Finance Minister Nirmala Sitharaman announced that NaBFID will set up the credit enhancement facility. "We are now awaiting more clarifications on it," a dealer at another mid-sized brokerage firm said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 13.20 million were traded at a weighted average yield of 6.6203-7.5637%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Wednesday.

* INR 11.20 million of Tamil Nadu's February 2025 bonds and March 2025 bonds were traded at 7.0276%-7.5637%

* INR 2.00 million of Rajasthan's March 2026 bonds were traded at 6.6203% 

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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