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Informist, Thursday, Mar. 27, 2025

By Ashna Mariam George 

MUMBAI – Yields on corporate bonds in the secondary market fell for the third consecutive day as investors bought papers aggressively in anticipation of a 25-basis-point rate cut and a softer stance by the Reserve Bank of India's Monetary Policy Committee in April, dealers said. Yields on bonds maturing in three years and five years fell by 4-6 basis points, while yields on 10-year paper fell by 2-3 bps, dealers said.

"There was some buying (to lock in current yields) as a rate cut has been priced in," a dealer at a mid-sized brokerage firm said. "Some buying was also for financial year (2024-25) close because everyone would need to value their portfolios today (Thursday) and tomorrow (Friday), further they won't be able to add anything for this year."

Market participants also said that improvement in the liquidity conditions boosted demand for bonds in both primary and secondary markets. The net liquidity injected by the central bank--a proxy for liquidity conditions--declined to INR 407.88 billion on Wednesday, the lowest level since Mar. 4, from INR 1.57 trillion on Tuesday.

The fall in net liquidity injected was attributed to inflows from the settlement of dollar/rupee buy/sell swap auction and open market operation auction. As part of its efforts to infuse liquidity in the banking system, the RBI on Tuesday bought INR 445.41 billion of gilts through an open market operation auction. On Monday, it had conducted a $10 billion dollar/rupee buy/sell swap auction.

"The effect of improving liquidity is visible in the kind of demand for new papers in the primary market, and due to this, there is a rally in the secondary market as well," a dealer at another mid-sized brokerage firm said.

Trade volume improved in the secondary market with most participants actively trading in papers in the shorter and mid-term segment. While mutual funds were on the selling side, insurance companies were on the buying side. Banks and pension funds were also active in the market, dealers said. Deals aggregating INR 158.64 billion were recorded on the National Stock Exchange and the BSE combined, against INR 154.88 billion on Wednesday.

Bonds issued by REC, HDFC Bank, MSRDC Sea Link, LIC Housing Finance, Power Finance Corp., Sammaan Capital, Telangana State Industrial Infrastructure Corp., Indian Renewable Energy Development Agency, National Bank for Agriculture and Rural Development, Bajaj Finance, Small Industries Development Bank of India, and Shriram Finance were traded the most on the bourses.

In the primary market, activity was moderate on Thursday, with National Bank for Financing Infrastructure and Development raising INR 29.40 billion through 10-year bond at a coupon of 7.15%. Shriram Finance also tapped the market and raised INR 1.00 billion through reissuance of bonds maturing on Jul. 20, 2027 at a yield of 8.75%.

On Friday, Aptus Value Housing Finance India and Hinduja Leyland Finance have invited bids to raise funds through their bond offerings.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 55.90 million were traded at a weighted average yield of 7.0150-8.5035%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Thursday.

* INR 29.70 million of Rajasthan's Jun. 23, 2025, Mar. 15, 2026 and Mar. 31, 2026 bonds were traded at 7.0150-7.7263%

* INR 18.80 million of Haryana's Jun. 30, 2025 and Mar. 31, 2026 bonds were traded at 7.2415-8.5035%

* INR 7.40 million of Tamil Nadu's Feb. 22, 2028, Mar. 22, 2027, and Feb. 22, 2032 bonds were traded at 7.4025-7.5192%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke and Akul Nishant Akhoury

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