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Informist, Monday, Feb. 10, 2025

By Sachi Pandey 

MUMBAI – The yield on 10-year corporate bonds rose marginally in the secondary market on Monday, tracking a rise in government bonds, dealers said. The yield on government bonds rose following an increase in US Treasury yields, triggered by US President Donald Trump's threat to announce new tariffs within the week.

The yield on the 10-year US Treasury note climbed to 4.49% from 4.44% at 1700 IST on Friday. The benchmark 10-year government security – 6.79%, 2034 bond - closed at 6.71% yield on Monday compared to 6.70% on the previous day.

However, yields on three- and five-year papers remained stable as mutual funds showed interest in these shorter-term bonds. "The 3-year and 5-year bonds had already seen a rise on Friday post-MPC (Monetary Policy Committee). But today, they were steady as mutual funds and investors with specific maturity index funds continued to show demand in this segment," a dealer at a large brokerage firm said.

In the secondary market, the activity continued to be subdued on Monday with very few banks and mutual funds buying and selling papers. The sluggish activity was evident from the lower volume as deals aggregating to only INR 58.66 billion were recorded on the National Stock Exchange and BSE combined, against INR 60.64 billion on Friday. However, traders expect that in the next few days, portfolios will be repositioned, which could lead to increased trading volume.

Papers issued by REC, HDFC Bank, Equinox India Developments, National Bank For Financing Infrastructure And Development, Power Finance Corp., Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Small Industries Development Bank of India, and Sundaram Finance were traded the most on exchanges.

On the other hand, in the primary market of corporate bonds, marquee issuers like the Small Industries Development Bank of India and Housing and Urban Development Corp. raised funds through bonds. 

Housing and Urban Development Corp. raised INR 29.10 billion through bonds maturing in 10 years at a coupon of 7.29%. The investor demand, however, was weaker than expected, pushing the coupon rates higher. "The lack of demand pushed the coupon rates higher than expected. People were anticipating a coupon closer to 7.20%, but the final rate ended up being higher due to the limited interest from investors," another dealer at a brokerage firm commented.

According to the bid book accessed by Informist, the issue garnered 55 bids aggregating INR 48.90 billion in the range of 7.11-7.80% coupon rate. HUDCO had in December raised INR 12.30 billion at a coupon rate of 7.12%.

The Small Industries Development Bank of India raised INR 60 billion through bonds maturing on Mar. 12, 2029, at a coupon of 7.42%. The issue was fully subscribed. "The overall demand in the primary market is limited because of the mixed liquidity situation. In MPC outcome also (Reserve Bank of India) governor did not specify any measures or quantum about the liquidity because of that market is a little bit unhappy and does not have much confidence for taking positions right now," the dealer quoted above said. On Sunday, the net liquidity injected by the RBI, a key indicator of systemic liquidity, rose to INR 1.33 trillion, up from INR 1.08 trillion on Friday.

REC is set to raise up to INR 60 billion through two bond issuances on Tuesday. The company plans to raise up to INR 30 billion through bonds maturing on Feb. 20, 2040. Market participants expect the coupon for this bond to be in the range of 7.25-7.30%. REC also plans to re-issue bonds maturing on Feb. 26, 2027, to raise another INR 30 billion.

India Infrastructure Finance Co is also planning to raise up to INR 20 billion through bonds maturing on Mar. 20, 2028, on Tuesday. Several other public-sector entities are also expected to enter the debt market this week with bond offerings.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 22.30 million were traded at a weighted average yield of 7.0487-7.5350%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed on Monday.

* INR 6.50 million of Rajasthan's February 2026 bonds were traded at 7.5350% 

* INR 5.80 million of Tamil Nadu's February 2026 bonds were traded at 7.4776% 

* INR 5.00 million of Himachal Pradesh's February 2027 bonds were traded at 7.0505% 

* INR 5.00 million of Andhra Pradesh's October 2029 bonds were traded at 7.0487%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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