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Informist, Wednesday, Mar. 26, 2025

By Vaishali Tyagi

MUMBAI – The yields in the secondary market of corporate bonds fell for the second consecutive day as investors rushed to buy high-yielding papers amid growing expectations of a rate cut by the Reserve Bank of India's Monetary Policy Committee in April, dealers said. Yields declined 4-5 basis points across tenures Wednesday, they said. Traders are betting on a 25-basis-point rate cut and a softer stance by the committee in April.

"We saw aggressive buying demand from mutual funds and other investors across tenures, particularly 10-year bonds, as bets on a rate cut in the upcoming policy are gaining strength," a dealer at a mid-sized brokerage firm said. "Also, as the end of financial year, 2024-2025 (Apr-Mar), is approaching, investors are replacing existing papers with better-yielding ones in their portfolios." 

Dealers said yields also fell tracking a slight downward movement in government bond yields. Traders speculate that the Centre will release a light borrowing calendar for the first half of the financial year beginning in April. Wednesday, the 10-year gilt yield fell below 6.60% for the first time since January 2022.  

Mutual funds were very active on buying sides, dealers said. Insurance companies and banks also actively demanded papers across tenures. Pension funds remained on the sidelines throughout the day, they said. In the secondary market, deals aggregating INR 154.88 billion were recorded on the National Stock Exchange and the BSE combined, against INR 195.88 billion on Tuesday. 

Papers issued by REC, HDFC Bank, Indian Railway Finance Corp., Power Finance Corp., Telangana State Industrial Infrastructure Corp., Indian Renewable Energy Development Agency, National Bank For Agriculture And Rural Development, Bajaj Finance, Bajaj Housing Finance, Small Industries Development Bank of India, Aditya Birla Fashion and Retail, and HDB Financial Services were traded the most on the bourses. 

The primary market of corporate bonds saw a busy Wednesday with state-backed entities and non-banking financial companies raising funds. Indian Railway Finance Corp. raised INR 30.00 billion through bonds maturing on Apr. 27, 2035 at a coupon of 7.17%. The issue garnered demand to the tune of INR 95.33 billion from 72 bids. Another state-owned enterprise, India Infrastructure Finance Co. raised INR 10.00 billion through its bonds maturing in seven years at a coupon of 7.28%. 

"Clearly, there's an appetite for investment, as seen from the strong demand for IRFC papers, which fetched a better coupon in the primary market today (Wednesday). Since investors are unable to invest in the primary market, they're rushing to the secondary market. For instance, IRFC papers that were initially traded at 7.17% were later in demand at 7.12%," a dealer at another mid-sized brokerage firm said.

On Thursday, National Bank for Financing Infrastructure and Development has invited bids to raise up to INR 30.00 billion through bonds maturing in 10 years. AU Small Finance Bank, Sammaan Capital, and HDB Financial Services are also in line to raise funds on Thursday.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 255.0 million were traded at a weighted average yield of 6.75-7.19%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.

* INR 250.0 million of Madhya Pradesh's Mar. 22, 2026 bonds were traded at 6.75%

* INR 5.00 million of Uttar Pradesh's Jun. 2, 2030 bonds were traded at 7.19%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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