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Informist, Friday, Feb. 14, 2025

By Ashna Mariam George 

MUMBAI – Yields in the secondary market of corporate bonds ended the week on a steady note on Friday, owing to a dearth of firm domestic cues, dealers said. "There are no triggers...bulls and bears are playing around in the market and nobody has a clarity on which direction to go," a fixed income fund manager at a mid-sized mutual fund house said.

Market participants now say they are evaluating the liquidity conditions in the system. "All major events are over and the major thing we are looking at is liquidity," a dealer at a mid-sized public sector bank said. "Everyone is waiting to see if RBI (Reserve Bank of India) will take steps to infuse liquidity."

Liquidity in the banking system has been in deficit since mid-December, with market participants attributing the tightness to the RBI's spot dollar sales in order to soften the rupee's depreciation. The RBI's daily net liquidity injections – a proxy for the systemic liquidity deficit – remained over INR 2.00 trillion for more than half of January.

Although the RBI had implemented liquidity addressing measures such as bond purchases under open market operations and daily variable rate repo auctions, liquidity crunch in the system remain high, with the net liquidity injected by the RBI--a proxy for the systemic liquidity deficit--rising to INR 2.42 trillion on Thursday from INR 2.07 trillion on Wednesday.

"Whatever measures have been annouced, it is not helping liquidity...we are expecting another round of OMO of around 50,000 crores (INR 500 billion), maybe by mid-March," the public sector bank dealer quoted above said.

In the secondary market on Friday, deals aggregating to INR 104.38 billion were recorded on the National Stock Exchange and BSE combined, as compared to INR 86.65 billion on Thursday. Banks and insurance companies were active on both buying and selling side while mutual funds remained on the sidelines on Friday, dealers said. 

Papers issued by Housing And Urban Development Corp., LIC Housing Finance, Hinduja Leyland Finance, Sammaan Capital, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Small Industries Development Bank of India, and Aditya Birla Finance were traded the most on exchanges.

Meanwhile, the primary market on Friday was bustling with bond issuances worth over INR 60 billion from several entities. Bank of India raised INR 26.90 billion through infrastructure bonds maturing in 10 years at a coupon of 7.50%. "They were initially expecting 7.40% centric levels, but seeing the deamnd for PNB (Punjab National Bank) they changed their expectations to 7.45-7.50% for full amount. Though they did get 7.50% coupon but coul not raise the full amount since the demand was not very strong," a dealer at a large sized pension fund house said. 

Market participants also noted that overall demand for infrastructure papers has waned as the supply has increased. 

THDC India Ltd raised INR 7 billion through ring in 10 years at a coupon of 7.73%. Kerala Infrastructure Investment Fund Board raised INR 10.2508 billion through reissuance of staggered redemption bonds. 

Narayana Hrudayalaya, HDB Financial Services, and Cholamandalam Investment and Finance Co. raised funds aggregating to INR 16.50 billion Friday through their respective bond offerings. 

State-backed entities, banks, and private sector companies together raised funds worth over INR 455 billion this week. On Monday, too, issuances worth INR 110 billion are lined up. Power Finance Corp. has invited bids on Monday to raise up to INR 80 billion through two bonds of different maturities. Bank of Maharashtra will also tap the market on Monday to raise up to INR 30 billion through 10-year infrastructure bonds. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 26.30 million were traded at a weighted average yield of 6.9684-7.1963%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Friday.

* INR 10.50 million of Rajasthan's Feb. 7, 2026 and Mar. 15, 2026 bonds were traded at 6.9684-7.1451%

* INR 7.50 million of Haryana's Mar. 31, 2026 bonds were traded at 7.0921% 

* INR 5.80 million of Tamil Nadu's Feb. 22, 2026 bonds were traded at 6.9902% 

* INR 2.50 million of Uttar Pradesh's Mar. 29, 2027 bonds were traded at 7.1963% 

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj

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