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Informist, Thursday, Mar. 20, 2025

By Vaishali Tyagi 

MUMBAI – Yields in the corporate bond market fell 4-5 basis points across tenures on Thursday, driven by strong demand to buy bonds before the financial year-end. "We're seeing a strong rally in the corporate bond market, with most large primary issuances already completed," a dealer at a mid-sized brokerage firm said. "Investors are now focusing on existing papers in the secondary market, which drove yields down, as fresh issuances may be limited initially in the new financial year due to budget approvals."

Merchant bankers said market participants have already digested the US Federal Open Market Committee's decision to keep interest rates unchanged. Late on Wednesday, the FOMC announced its decision to keep the Fed funds target range unchanged at 4.25-4.50% in line with the market's expectations. Attention is now on the upcoming Reserve Bank of India policy decision, scheduled for early next month.

Mutual funds were active both on the selling and buying sides, dealers said. Insurance companies, pension funds, and banks also actively demanded papers across tenures, with dealers noting that the most aggressive demand came from state-owned banks. "Most entities need to meet their year-end targets, so traders are prioritising portfolio requirements as well," a dealer at another mid-sized brokerage firm said. "There was participation by players from all segments on the buying side, which added to the demand, and drove yields down." 

On Thursday, deals aggregating INR 195.91 billion were recorded on the National Stock Exchange and BSE combined, against INR 202.93 billion on Wednesday. Bonds issued by Reliance Capital, REC, Housing And Urban Development Corp., HDFC Bank, Oxyzo Financial Services, LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., HDFC Ergo General Insurance Co., and Small Industries Development Bank of India were traded the most on exchanges. 

On the primary market side, activity remained moderate. On Friday, frequent issuer, LIC Housing Finance plans to raise INR 70.00 billion through bonds maturing in three years. Motilal Oswal Home Finance has also invited bids to raise INR 2.00 billion through bonds maturing in three years. Emkay Global Financial Services and Vivriti Capital are also in line to tap the market with their respective bond issuances on Friday. 

Going forward, dealers expect primary market issuances to slow down in the near term, particularly from big-ticket issuers. Most key issuers have already raised significant amounts, so we may see a break in issuance until the new financial year (FY26) begins, they said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 54.63 million were traded at a weighted average yield of 6.9951-7.2046%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Thursday.

* INR 43.63 million of Uttar Pradesh's Jun. 2, 2028, Mar. 21, 2029 and Mar. 29, 2031 bonds were traded at 6.9982-7.2046%

* INR 11.00 million of Tamil Nadu's Feb. 22, 2027 bonds were traded at 6.9951%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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