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Informist, Friday, Mar. 28, 2025

By Ashna Mariam George 

MUMBAI – Rush from investors to deploy funds ahead of the financial year-end pushed yields down by 4-6 basis points across tenures on corporate bonds in the secondary market Friday, dealers said. "There was some good buying activity today (Friday) as it was the last working day of the financial year and everyone wanted to deploy cash," a dealer at a mid-sized brokerage firm said. "Some insurance companies, pension funds and FPIs (foreign portfolio investors) were buying actively."

Mutual funds and banks were also active on both buying and selling sides, dealers said. Trade volume fell in the secondary market with deals aggregating to INR 117.06 billion being recorded on the National Stock Exchange and the BSE combined, against INR 158.64 billion on Thursday.

Bonds issued by HDFC Bank, Hyderabad Jabilli Properties, L&T Metro Rail (Hyderabad), MSRDC Sea Link, Power Finance Corp., National Bank for Agriculture And Rural Development, National Housing Bank, LIC Housing Finance, Tata Capital Financial Services, Trust Capital Services (India), Bajaj Finance, Mahindra and Mahindra Financial Services, and Annapurna Finance were traded the most on the bourses.

Meanwhile, market participants welcomed the central government's borrowing plan for the first half of the next financial year, announced late Thursday. According to the plan, the government will borrow INR 8.00 trillion through dated securities in Apr-Sept, which is 53.98% of the gross market borrowing target of INR 14.82 trillion for 2025-26 (Apr-Mar). "The borrowing plan came in line with expectation, and so the market is now expecting a rate cut in April," a dealer at another mid-sized brokerage firm said. 

In its meeting scheduled for Apr. 7-9, the Reserve Bank of India's Monetary Policy Committee is widely expected to cut the repo rate by 25 bps to 6.00%. Market experts expects the spread between corporate bonds and government securities to narrow post policy as the yield on government securities may not fall sharply. "Growth, CPI numbers, and rate cuts are already factored in the g-sec (government securities) market. If there is anything on liquidity that could be something fresh for the market," a fund manager at a mid-sized mutual fund house said. "For corporate bonds there was a surge of the (primary) supply and that will not be there in the next quarters, so, probably corporate bond should outperform the g-secs after the policy."

The net liquidity injected by the central bank--a proxy for liquidity conditions--declined to INR 130.30 billion on Thursday. The RBI has been using various tools like open market operation auction, dollar/rupee buy/sell swap auction, and daily variable rate repo auctions to manage liquidity deficit in the system.

The primary market of corporate bonds witnessed subdued activity on the last day of the financial year, following a flurry of issuances this week. Companies raised INR 355.40 billion through private placements of 76 bonds in the final week of the financial year.

On Friday, only two companies raised funds through primary market. Aptus Value Housing Finance raised INR 1.50 billion through paper maturing in five years at a coupon of 8.75% and Hinduja Leyland Finance raised INR 350.00 million through the reissuance of bonds maturing on Oct. 3, 2030, at a yield of 9.25%. Both the issuances were fully subscribed. 

On Tuesday, Edel Finance invited bids to raise up to INR 1.50 billion through two bonds, while Infinity Fincorp Solutions Pvt. Ltd. sought bids for three-year bonds, aiming to raise INR 500.00 million. Money markets will be shut on Monday for Id-ul-Fitr.

Market participants anticipate a slowdown in bond supply with the onset of the new year, as companies and financial institutions will first charter out their fundraising plans for 2025-26.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 8.00 million were traded at a weighted average yield of 7.2410-7.2623%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Friday.

* INR 4.00 million of Tamil Nadu's Feb. 22, 2027 bonds were traded at 7.2623%

* INR 3.00 million of Telangana's Mar. 7, 2027 bonds were traded at 7.2410%

* INR 1.00 million of Uttar Pradesh's Mar. 21, 2027 bonds were traded at 7.2570%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

With inputs from Sachi Pandey 

Edited by Deepshikha Bhardwaj

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