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Informist, Friday, Mar. 21, 2025

By Ashna Mariam George 

MUMBAI – Demand from investors to deploy funds ahead of the financial year-end pushed yields down across tenures on corporate bonds in the secondary market Friday, dealers said. Yields on corporate bonds fell by around 4-6 basis points, they said. 

"There was active buying from mutual funds and FPIs (foreign portfolio investors) since its March-end, few mutual funds were also on the selling side to meet portfolio requirements," a dealer at a mid-sized brokerage firm said. While a handful of banks were also on the selling side, insurance companies and pension funds remained on the sidelines on Friday, dealers said.

Trade volumes rose in the secondary market Friday, with deals aggregating INR 214.09 billion being recorded on the National Stock Exchange and BSE combined, against INR 195.91 billion on Thursday. Bonds issued by REC, Reliance Capital, HDFC Bank, State Bank of India, LIC Housing Finance, Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture And Rural Development, Bajaj Finance, Bharti Telecom, Can Fin Homes, Small Industries Development Bank of India, and Edelweiss Rural Corporate Services were traded the most on exchanges. 

Market participants also said increased confidence about a 25-basis-point repo rate cut in April, coupled with slightly better liquidity conditions, boosted the demand for bonds. The net liquidity injected by the Reserve Bank of India – a proxy for systemic liquidity conditions – was at INR 2.32 trillion Thursday compared to INR 2.29 trillion Wednesday.

"There was a phase when people's views on rates and market were not that positive, and they were holding on to cash... now that general consensus has changed... rates heading into April would be lower, there is a positive demand in the market," a dealer at a mid-sized private sector bank said. "The SDL (cut-offs on state development loans) has also come in lower buoyed by high demand... also the overall liquidity is in a better place now and year-end government spending should mean that the April liquidity should also be quite comfortable. We are set up for a nice couple of weeks heading into the MPC meeting (RBI's monetary policy committee)." 

Meanwhile, the primary market activity remained moderate on Friday, with only one major issuance. LIC Housing Finance raised INR 70.00 billion through bonds maturing in three years at a coupon of 7.58%.

On Monday, Kerala Infrastructure Investment Fund Board plans to raise up to INR 5.00 billion through bonds maturing in 10 years. Edelweiss Alternative Asset Advisors will also tap the market on Monday to raise INR 2.00 billion through bonds maturing in three years. Edel Finance, Chalet Hotels, and Earlysalary Services have also invited bids on Monday to raise funds through bonds.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 438.60 million were traded at a weighted average yield of 6.7802-7.1138%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Friday.

* INR 417.60 million of Haryana's Mar. 31, 2025, Jun. 15, 2025, and Mar. 31, 2026 bonds were traded at 6.7802-7.0920%

* INR 20.00 million of Rajasthan's Mar. 15, 2026 bonds were traded at 7.0910%

* INR 1.00 million of Andhra Pradesh's Oct. 18, 2029 bonds were traded at 7.1138%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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