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Informist, Tuesday, Mar. 11, 2025

By Sachi Pandey

MUMBAI – Yields on corporate bonds ended the day on a steady note, as market participants avoided placing significant bets and adopted a cautious, "wait-and-watch" approach ahead of the year-end, dealers said. 

"The market is in wait mode. It is near year end and they are just keeping the positions they have. Also since their are tax outflows, liquidity deficit is also kept in mind," a dealer at a mid-sized brokerage firm said.

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 1.45 trillion on Monday, largely unchanged from INR 1.46 trillion on Saturday. Advance tax outflows which will start on Wednesday are expected to be more more than usual becuase of year-end, dealer said, "The outflows could be around INR 2 trillion so despite all the measure there will be a hit on liquidity."

Meanwhile, despite a better-than-expected cut-off yield in the state bond auction, yields in the corporate bond secondary market remained unchanged. At the INR 495.22-billion state bond auction, the cut-off yield for most bonds was lower than anticipated as RBI set the cut-off yield for 10-year state bonds at 7.18%, slightly lower than the 7.20-7.22% range forecasted by an Informist poll.

Government bond yields also showed limited movement after the state bond auction's results. The 10-year benchmark government bond closed at 6.6938%, slightly down from 6.7024% on Monday.

In the secondary market of corporate bonds, most market activity was concentrated in shorter-tenure papers, dealers said. They noted that mutual funds were active sellers of corporate bonds on Tuesday, while banks were purchasing them. A few foreign banks were also active in the secondary market, while other participants remained on the sidelines.  

On Tuesday, deals aggregating INR 138.36 billion were recorded on the National Stock Exchange and BSE combined, compared to INR 149.49 billion on Monday. The most actively traded bonds included those issued by REC, Embassy office Parks Reit, State Bank of India, Mancherial Repallewada Road, LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Bajaj Finance, Tata Capital Financial Services, Can Fin Homes, Small Industries Development Bank of India, Kerala Infrastructure Investment Fund Board, HDB Financial Services, and Tata Capital.

The activity in the primary market also remained dull with only LIC Housing Finance raising funds through corporate bonds. The housing financier raised INR 12.25 billion through the reissuamce of bonds maturing on Feb. 21, 2030 at a yield of 7.68%. According to market participants only qualified institutional buyers were the investors for the issuance. 

"The slowdown in supply is temporary due to the festive season (Holi on Friday). After this week, primary market activity is expected to pick up again," a dealer at a mid-sized private bank said.

On Wednesday, India Infradebt plans to raise up to INR 4.00 billion through bonds maturing on Dec. 6, 2034. L&T Finance also seeks bids to raise funds worth INR 3.00 billion through bonds maturing on Jan. 4, 2027. 

Kosamattam Finance and Indel Money has also invited bids to raise INR 1.00 billion each through their respective bond offerings, while Moneyboxx Finance plans to raise INR 150 million via two-year bonds. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 17.20 million were traded at a weighted average yield of 7.103-7.5380%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.

* INR 7.90 million of Tamil Nadu's Mar. 2029-Feb. 2030 bonds were traded at 7.4660-7.5250%

* INR 5.00 million of Uttar Pradesh's Jun. 2030-Mar. 2031 bonds were traded at 7.4940-7.5270%

* INR 2.00 million of Telangana's Mar. 2031 bonds were traded at 7.5380%

* INR 1.50 million of Himachal Pradesh's Feb. 2027 bonds were traded at 7.1030%

* INR 0.80 million of Punjab's Mar. 2031 bonds were traded at 7.340%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj

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