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Informist, Thursday, Feb. 20, 2025

By Ashna Mariam George

MUMBAI – Yields on corporate bonds were little changed in the secondary market Thursday compared to Tuesday, due to dearth of strong domestic signals, dealers said. Indian money markets were shut Wednesday for Shivaji Maharaj Jayanti. "There is no event happening, and no news is expected," a dealer at a mid-sized brokerage firm said.

Market participants expect the levels in secondary market to remain steady in the near term. "This band will go on at least till March end, any movement will depend on (the Reserve Bank of India's) liquidity support," a dealer at another mid-sized brokerage firm said. Although the RBI has undertaken liquidity addressing measures such as bond purchases under open market operations and daily variable rate repo auctions, it still remains a concern for market participants.

On Thursday, the RBI bought INR 40.91 billion of the 6.79%, 2034 gilt through open market operation and set the cut-off price at INR 100.72 against INR 100.80 in an Informist poll. The yield on the 10-year benchmark paper closed nearly 2 basis points higher at 6.70%, as the cut-off and quantum accepted on the 10-year benchmark was lower than market expectation.

"The (government bond) market has reacted negatively post OMO result...OMO results will primarily impact the g-secs market, it won't directly impact the yields in the corporate bond market," a fixed income fund manager at a mid-sized mutual fund house said.

The secondary market of corporate bonds on Thursday saw deals aggregating to INR 118.54 billion being recorded on the National Stock Exchange and BSE combined, compared with INR 137.62 billion on Tuesday. Mutual funds and banks were active on the buying and selling sides, dealing in shorter tenure papers, dealers said. Activity in the longer-end of the curve was dull, they said.

Papers issued by Indian Railway Finance Corp., LIC Housing Finance, Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., National Bank for Agriculture and Rural Development, Bajaj Finance, Hinduja Housing Finance, SMFG India Credit Co., and India Infrastructure Finance Co. were traded the most on the exchanges.

Activity in the primary market of corporate bonds picked up Thursday, with three major issuances taking place. Tata Steel raised INR 30 billion through bonds maturing on Feb. 21, 2030 at 7.65% yield. LIC Housing Finance tapped the market to raise INR 10 billion through bonds maturing in five years at a coupon of 7.645%. Cube Highways Trust raised INR 6 billion through bonds maturing on Mar. 31, 2044 at 7.59% yield.

UDAY BONDS

In the secondary market, Rajasthan's Jun. 23, 2026 and Mar. 31, 2026 Ujwal DISCOM Assurance Yojana bonds aggregating to INR 18.30 million were traded at a weighted average yield of 7.15-7.15-7.16%, data from the RBI's Negotiated Dealing System–Order Matching System showed Thursday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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