India Corporate Bonds
Yields steady in need-based trade; traders await cues
This story was originally published at 20:01 IST on 10 March 2025
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By Vaishali Tyagi
MUMBAI – Yields on corporate bonds were steady in the secondary market Monday as most participants kept their activity limited to requirement-based trading, dealers said. "Overall, the activity was dull, and whatever activity happened, it was in the longer tenure papers," said a dealer at a mid-sized brokerage firm. "It was just participants churning their portfolios, nothing significant other than requirement-based trading."
Dealers attributed the dull trading activity to the year-end liquidity crunch. "The liquidity is tight, despite the open market operations by the Reserve Bank of India," the dealer at the mid-sized brokerage said. "Whatever demand is coming, it is being met by supply, but not much activity is being observed."
According to data from the Reserve Bank of India, the net liquidity injected by the central bank – a proxy for systemic liquidity conditions – was at INR 1.46 trillion on Sunday, compared with INR 824.65 billion on Friday. Market participants attributed the rise in deficit to the additional cash balance maintained by banks with RBI on Sunday. As per the latest data, funds maintained by RBI rose to INR 9.56 trillion on Sunday as against INR 8.94 trillion on Friday.
Another dealer said steady yields on corporate bonds indicate that investors are waiting for more market signals before making significant bets and taking positions. "It's a wait-and-watch thing for now, as participants are focusing on managing their portfolios rather than taking big bets." Market participants said the current yields in the secondary market will remain largely the same unless some significant event takes place.
Most activity was in longer tenure papers, dealers said. Mutual funds were both on the buying and selling sides. A handful of banks were actively selling, dealers said. Other participants, including insurance companies and pension funds, remained on the sidelines. On Monday, deals aggregating INR 149.49 billion were recorded on the National Stock Exchange and BSE combined, compared to INR 170.33 billion on Friday.
Papers issued by Earlysalary Services, Rural Electrification Corp., HDFC Bank, Hella Chemical Market, Piramal Retail, LIC Housing Finance, Power Finance Corp., Sammaan Capital, IIFL Samasta Finance, Export Import Bank of India, Small Industries Development Bank of India, National Housing Bank, HDB Financial Services, GMR Airports Infrastructure, Torrent Power, and Tata Capital, were traded the most on exchanges.
The activity in the primary market remained moderate. Housing and Urban Development Corp. raised INR 28.43 billion through bonds maturing on Mar. 12, 2035, at a coupon of 7.37%. According to the bid book accessed by Informist, the issue got 114 bids totalling INR 74.83 billion in a coupon range of 7.10-7.48%. "HUDCO's issuance received a decent response from investors, seeing the current liquidity crunch," a fund manager at a mid-sized mutual fund house said. "However, the cut-off was slightly higher than market expectations."
On Tuesday, Hopkins Healthcare is set to raise up to 700 million by issuing bonds maturing in three years. Dealers expect a surge in primary bond market issuances in the near term as the financial year-end approaches. With issuers aiming to complete their fundraising targets, several state-owned entities are likely to tap the market in the next week or so.
UDAY BONDS
In the secondary market, Tamil Nadu's Feb. 22, 2032, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 1 million were traded at a weighted average yield of 7.1664%, data from the RBI's Negotiated Dealing System–Order Matching System showed Monday.
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Monday | Friday |
Three-year | 7.55-7.57% | 7.54-7.56% |
Five-year | 7.46-7.48% | 7.45-7.47% |
10-year | 7.36-7.38% | 7.35-7.38% |
End
Edited by Saji George Titus
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