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Informist, Tuesday, Mar. 4, 2025

By Sachi Pandey

MUMBAI – Yields on corporate bonds ended steady in the secondary market Tuesday, as market participants avoided placing significant bets in a market devoid of firm cues, dealers said. Even the INR 505-billion state bond auction, which saw weak demand, failed to provide cues to the market, dealers added.

"I don't think there's any depth in the secondary market as of now. The outcome was kind of known that it will be higher and the corporate bond yields never react to G-Sec (government securities) or SDL (state-loans) cut-offs immediately, I have never seen that. They (corporate bond yields) will go up but there is no immediate reaction to it," vice president of debt capital markets at a large sized brokerage firm said. "The rate reset will happen only when there is a new primary issue."

The government bond market also remained largely unchanged following the state bond auction, with the benchmark 6.79%, 2034 gilt ending at 6.74%, unchanged from Monday. According to the Reserve Bank of India, 14 states raised INR 505 billion, with the coupons ranging from 7.06-7.34%.

On the other hand, improvement in liquidity conditions, driven by the government's month-end spending and inflows from the central bank's dollar/rupee swap settlement on Tuesday, led to some demand for short-term bonds, dealers said. "Banks and mutual funds were mainly selling short-tenure bonds, while longer-term bonds still lack liquidity," said a dealer at a mutual fund house.

On Monday, the net liquidity injected by the Reserve Bank of India--a proxy for the systemic liquidity deficit--was INR 1.10 trillion. However, dealers said that the liquidity conditions are still not stable owing to the upcoming outflows on account of tax deducted at source, excise duty, and advance tax payments.

Deals aggregating INR 163.99 billion were recorded on the National Stock Exchange and BSE combined, compared with INR 95.54 billion at the same time Monday. Papers issued by REC, Housing and Urban Development Corp., HDFC Bank, Indian Railway Finance Corp., State Bank of India, LIC Housing Finance, Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., Indian Renewable Energy Development Agency, National Bank for Agriculture and Rural Development, Bajaj Finance, Small Industries Development Bank of India, and National Housing Bank were traded the most. 

In the primary market, UltraTech Cement raised INR 20 billion through two bonds of different maturities. The cement giant raised INR 10 billion each through bonds maturing in three years and five years. Both the issuances, which were fully subscribed, carry a fixed coupon of 7.34%, payable annually. Axis Bank is said to be the arranger for the issue. 

On Wednesday, several non-banking financial companies are set to tap the market. Cholamandalam Investment and Finance Co. has invited bids to raise up to INR 15 billion through unsecured bonds maturing in seven years at a fixed coupon of 9.05%. Anzen India Energy Yield Plus Trust is also seeking bids for three-year bonds to raise INR 7 billion at a rate of 7.77%.

Aptus Finance India, Ecobox Industrials Asset, Keertana Finserv will also raise funds on Wednesday. 

Market participants said issuances, especially those by public sector entities, have slowed as most investors have already met their limits and are demanding higher rates, which issuers are reluctant to accept.

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 Tuesday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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