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Informist, Monday, Mar. 3, 2025

By Sachi Pandey

MUMBAI –  Yields on corporate bonds in the secondary market started the week on a steady note as market participants limited their activity only to requirement-based trading, dealers said. The market lacked significant catalysts to drive movement, dealers added.

"Today (Monday) was a quiet day as there were no major cues to move the market. Tomorrow's (Tuesday's) state bond auction could bring some action, but other than that, things are likely to stay steady," a dealer at a mid-sized mutual fund house said.

On Friday, the Reserve Bank of India announced that 14 states plan to borrow INR 505 billion on Tuesday, exceeding the initial indicated quantum of INR 403.50 billion. Market experts expect the yields difference between 10-year corporate bonds and government bonds, and corporate bonds and state bonds to widen this month due to the increased supply. Currently, the yield difference between 10-year government bonds and corporate bonds is around 49-52 basis points, while the difference between state bonds and corporate bonds is 20-35 bps.

In the secondary market of corporate bonds, deals aggregating to INR 95.54 billion were recorded on the National Stock Exchange and BSE combined, compared with INR 79.34 billion at the same time Friday. Only a few mutual funds and traders were active on the buying and selling sides, as other participants remained on sidelines, dealers said. 

Papers issued by REC, HDFC Bank, State Bank of India, ICICI Home Finance Co., SBM Bank, Cholamandalam Investment and Finance Co., Power Finance Corp., Sammaan Capital, National Bank for Agriculture and Rural Development, Tata Capital Financial Services, Bharti Telecom, Muthoot Finance, Small Industries Development Bank of India, Kerala Infrastructure Investment Fund Board, HDB Financial Services, and Kotak Mahindra Prime were traded the most on exchanges. 

In the primary market of corporate bonds, LIC Housing Finance raised INR 7.00 billion through reissuance of bonds maturing on Oct. 22, 2027 at a yield of 7.74%. Can Fin Homes raised INR 5.40 billion through bonds maturing on Jan. 4, 2027 at a coupon of 8.09%. 

On Tuesday, UltraTech Cement has invited bids to raise funds through two bond issuance. The country's largest cement company plans to raise up to INR 10 billion through bonds maturing in five years, and other 10 billion through bonds maturing in three years. "The papers will get a demand from mutual funds, but long investors might also be interested in this paper since it is 'AAA' and they are rare issuers," a senior official at a large-sized brokerage firm said. 

On Nov. 12 last year, the board of UltraTech Cement had approved raising up to INR 30 billion through non-convertible, non-cumulative debentures in one or more tranches on a private placement basis. Last time the company raised funds was in November, when it raised INR 10 billion though bonds maturing in 10 years at a coupon of 7.22%. The issue was fully subscribed. 

UDAY BONDS

In the secondary market, none of the Ujwal DISCOM Assurance Yojana bonds were traded, as per the data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System on Monday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

Edited by Tanima Banerjee

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