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Informist, Thursday, Mar. 13, 2025

By Sachi Pandey

MUMBAI – The corporate bond market remained steady on Thursday, with yields largely unchanged as attention shifted to the primary market, dealers said. There were no significant triggers to drive the secondary market, dealers said, adding that the holiday on Friday for Holi had also prompted many market participants to take an extended break.

"The market has been quiet for some time, and with Holi, this silence extends further. There's nothing driving the market right now. CPI data could have provided some cues, but those effects might be seen only on Monday. The secondary market is dead at the moment, but surge of primary issuances and the coupons are to be looked at," a dealer at a mid-sized brokerage firm said.

In the primary market, Power Finance Corp. was the biggest issuer. The company raised INR 56.85 billion through two bonds of different maturities. The company raised INR 16.85 billion at a coupon of 7.75% through bonds maturing on Apr. 15, 2026 and INR 40 billion at a coupon of 7.45% by issuing Jul. 15, 2028 bonds.

The coupon on the July 2028 bonds was in line with market expectations, while that on the April 2026 bonds was nearly 15 basis points higher than anticipated. According to the bid book accessed by Informist, the April 2026 bond issue got only 50 bids totalling INR 28.10 billion and the coupon ranged from 7.64-7.85%.

"Short-term investors usually struggle with liquidity tightening the most around mid-March and generally stay away from the market, which led to subdued demand in the short-end. However, for the 2028 bonds, some banks were keen on investing and then demand was there from pension and insurance companies as well, so they got expected bids for that," a fund manager at a mid-sized mutual fund house said. Foreign institutional investors also showed interest in PFC's bonds due to the wider spreads offered, dealers said.

According to data from the Reserve Bank of India, the net liquidity injected by the central bank--a proxy for systemic liquidity conditions--increased to INR 1.38 trillion on Wednesday from INR 1.05 trillion on Tuesday. Outflows on account for payment of advance tax are expected to drain around INR 2.50 trillion from the banking system starting Thursday.

HDFC Ergo General Insurance tapped the bond market on Thursday to raise INR 3.25 billion through bonds maturing in 10 years at a coupon of 8.20%. Arka Fincap raised INR 2.50 billion through bonds maturing in 10 years at a coupon of 9.25%. Standard Chartered also raised funds through corporate bonds on Thursday.

On Monday, public sector entities, banks, and non-banking financial companies plan to raise up to INR 170.15 billion through bond offerings. REC Ltd. has invited bids to raise up to INR 60.00 billion through two bonds of different maturities. The company plans to raise up to INR 30.00 billion through each bonds maturing on Feb. 29, 2028 and Feb. 28, 2035. "It is very difficult to give coupon expectations ahead of year end. We might expect something, but the market can react differently. It is very uncertain, especially with tight liquidity conditions that is there," the fund manager quoted above said.

Canara Bank plans to raise up to INR 40 billion through Basel III-compliant tier-II bonds maturing in 10 years. According to market participants, the bank aims to raise funds in the range of 7.40-7.45%. However, the general market consensus is that the coupon might go as high as 7.60%. On Mar. 6, Informist had reported exclusively that Canara Bank was likely to raise up to INR 40 billion through Basel III-compliant tier-II bonds maturing in 10 years.

Aditya Birla Finance plans to raise up to INR 62.50 billion through four bonds of different maturities on Monday. Magnum Ventures Ltd., Hinduja Leyland Finance Ltd., and Sylvanus Properties Ltd. are also in queue to raise funds through their bond offerings on Monday.

In the secondary market, overall activity remained muted on Thursday. Banks were seen selling bonds, while mutual funds were active on both the buy and sell sides. Deals aggregating INR 134.38 billion were recorded on the National Stock Exchange and BSE combined, against INR 174.13 billion on Wednesday.

Bonds issued by the REC, National Bank for Agriculture and Rural Development, HDFC Bank, Indian Railway Finance Corp., LIC Housing Finance, Cholamandalam Investment and Finance Co., Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., Muthoot Capital Services, Navi Finserv, Small Industries Development Bank of India, HDB Financial Services, and Mahindra and Mahindra Financial Services were traded the most across tenures.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 7.50 million were traded at a weighted average yield of 7.2090-7.2441%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Thursday.

* INR 6.50 million of Rajasthan's Feb. 7, 2026 bonds were traded at 7.2090%

* INR 1.00 million of Telangana's Mar. 7, 2031 bonds were traded at 7.2441%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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