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Informist, Tuesday, Feb. 11, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds remained in a narrow range across tenures in the secondary market on Tuesday, with most participants focusing on activity in the primary market, dealers said. "It was slightly hectic in the morning but after that it was mostly dull with sluggish demand for papers across tenures. Whatever supply came, it matched the demand, therefore no impact on yields was seen," a dealer at a mid-sized brokerage firm said. "Primary market was quite active today with two state-backed entities raising funds."

Dealers said volume in the secondary market remained low, as has been the case since the outcome of the Reserve Bank of India's policy. The central bank's Monetary Policy Committee on Friday unanimously decided to cut the repo rate by 25 basis points to 6.25%, while maintaining the 'neutral' stance. "Everybody is focusing on fresh papers coming in the primary market," the dealer quoted above said. "Even traders in secondary market are reshuffling their portfolios, but the volume is not that high. It may take some time for the volume to pick up in the secondary market, but as of now, the trend says it is dull."

During the day, the yields on 10-year corporate bonds fell slightly, tracking a slight decline in government securities, but eventually returned to the same levels as Monday, dealers said. Yield on 10-year government bond remained slightly lower after the RBI doubled the size of gilt purchases through an open market operation auction Thursday, dealers said. Traders flocked to bonds with maturities of 10-15 years on hope of the RBI increasing the size of its OMO auction on Feb. 20, along with expectations of more such buys.

On Tuesday, deals aggregating INR 58.91 billion were recorded on the National Stock Exchange and BSE combined, compared to INR 58.66 billion on Monday. Mutual funds were both on the buying and selling sides, dealing in papers across tenures. A handful of banks were actively selling, dealers said. Other participants including insurance companies and pension funds remained on sidelines.

Papers issued by REC, Titan Co., Power Finance Corp., Small Industries Development Bank of India, National Bank for Financing Infrastructure and Development, Shriram Finance, Mangalore Refinery and Petrochemicals, and LIC Housing Finance were traded the most on exchanges.

The primary market saw fairly good activity, with several entities cumulatively raising over INR 66 billion, dealers said. "As the financial year draws to a close, we expect to see more issuers coming to the market to raise funds," a fund manager at a mid-sized mutual fund house said. 

REC raised INR 52.80 billion through the issuance of two bonds of different maturities. The state-owned entity raised INR 25.95 billion through bonds maturing on Feb. 20, 2040. According to the bid book accessed by Informist, the issue received 65 bids aggregating to INR 51.60 billion in the range of 7.10-7.80%. The company raised another INR 26.85 billion by reissuing bonds maturing on Feb. 26, 2027.

India Infrastructure Finance raised INR 10.40 billion through bonds maturing on Mar. 20, 2028, at a coupon of 7.56%. Aditya Birla Finance raised INR 3.53 billion through a perpetual tier-II bond issue at a fixed coupon of 8.7340%. 

On Wednesday, National Bank for Agriculture and Rural Development is set to raise up to INR 50 billion by reissuing bonds maturing on Mar. 24, 2028. Indian Railway Finance Corp. will tap the market to raise INR 30 billion by issuing bonds maturing in 15 years. L&T Finance has also invited bids to raise INR 5 billion through March 2030 bonds.

UDAY BONDS

In the secondary market, Telangana's Mar. 7, 2025 Ujwal DISCOM Assurance Yojana bonds aggregating INR 21.0 million were traded at a weighted average yield of 7.1078%, data from the RBI's Negotiated Dealing System–Order Matching System showed on Tuesday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

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

Edited by Ashish Shirke

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