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Informist, Tuesday, Feb. 25, 2025

By Vaishali Tyagi

MUMBAI – Corporate bond yields remained steady in the secondary market on Tuesday, as market participants shifted their focus to the primary market, dealers said. "There's nothing new in the secondary market to look forward to, no significant event is happening there, so traders have shifted their focus to the primary market," a dealer at a mid-sized brokerage firm said.

Dealers said yields will remain steady in the secondary market in the near term. "We expect secondary market activity to remain limited for some time, with yields moving in a narrow range," a dealer at a mid-sized brokerage firm said.

The primary market, on the other hand, is seeing an increase in supply, driven by factors such as credit demand and the end of the financial year 2024-25 (Apr-Mar).

Indian financial markets are shut Wednesday on account of Mahashivratri. On Tuesday, the secondary market of corporate bonds saw deals aggregating to INR 119.76 billion on the National Stock Exchange and BSE combined, compared with INR 111.77 billion Monday. Mutual funds were buying as well as selling papers across tenures. A handful of banks were actively selling, dealers said. Other participants including insurance companies and pension funds remained on the sidelines. "A slight selling was seen during early market hours by some mutual funds and banks as they were making space to invest in primary bond issuances, but later it slowed down," a dealer at a mid-sized brokerage firm said.

Papers issued by REC, SBM Bank (India), LIC Housing Finance, Cholamandalam Investment and Finance Co., Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., Godrej Industries, National Bank for Agriculture and Rural Development, Muthoot Finance, Small Industries Development Bank of India, National Housing Bank, and Mahindra and Mahindra Financial Services were traded the most on the exchanges.

The primary market was quite active Tuesday, with companies raising over INR 72 billion through their bond offerings. National Housing Bank raised INR 48 billion through bonds maturing on Jan. 2, 2032 at a coupon of 7.35%. According to the bid book accessed by Informist, the issue garnered 101 bids aggregating to INR 63.20 billion in the range of 7.23-7.41%.

REC raised INR 19.95 billion through perpetual bonds at a coupon of 7.99%. "REC's perpetual bond issuance was fine, with a competitive coupon of 7.99% and a substantial raise of INR 19.95 billion, especially given the current market conditions," a dealer at a mid-sized brokerage firm said. "Although they didn't raise the full amount, the levels were considered fine for perpetual bonds, considering the supply-demand dynamics, and as investors are waiting for other state-owned entities like PFC, NABARD, and SIDBI."

Mahindra and Mahindra Financial Services raised INR 5 billion through unsecured bonds maturing in 10 years at a fixed coupon of 8.30%. 

On Thursday, issuances aggregating over INR 240 billion are lined up from state-backed entities and private companies. Power Finance Corp. has invited bids to raise up to INR 80 billion through two bonds of different maturities. NABARD plans to raise up to INR 70 billion through infrastructure bonds maturing on May 28, 2035. SIDBI will tap the market to raise up to INR 60 billion through bonds maturing on Jun. 11, 2029. 

Bajaj Finance, NIIF Infrastructure Finance, and Hinduja Leyland Finance are also in line to raise funds on Thursday. 

The corporate bond market is seeing a rush of large-ticket issuances, with a strong pipeline of major state-backed entities lined up for the rest of the week. As March approaches, issuers are stepping up their fundraising efforts to meet their year-end and business targets.

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market Tuesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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