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Informist, Monday, Apr. 7, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds rose by 2-3 basis points across tenures on Monday, mirroring a rise in government bond yields, dealers said. This increase is largely attributed to rising demand for state bonds and Treasury bills, which has dampened investor interest in government bonds, they added. Traders are now eagerly waiting cues on interest rates from the Reserve Bank of India's Monetary Policy Committee meeting outcome on Wednesday.

"We saw a good rally in corporate bonds (prices) last week, with a sharp fall in yields, but it's slightly returning to normal after selling pressure was seen in the market today (Monday), and yields rose 2-3 basis points," a dealer at a mid-sized brokerage firm said. Market activity was moderate, with mutual funds and a few banks selling papers across tenures, while corporates were actively buying. "Some selling pressure was observed during the day due to sell-offs from insurance companies and mutual funds but later as the day passed, the pressure cooled down," the dealer quoted above said.

Dealers speculated that some investors are holding back cash in anticipation of the monetary policy announcement, which may lead to increased buying activity in the near future. Additionally, investors who were unable to participate in the primary market for new bond issuances are creating space in their portfolios to invest in these bonds in the secondary market. All these factors might have contributed to the selling pressure, dealers added. 

Market participants expect yields to continue rising until the Monetary Policy Committee outcome. "Now, people have started selling after locking in high-yielding papers last week," a dealer at another mid-sized brokerage firm said. "The RBI's monetary policy decisions play a big role in shaping the bond market's dynamics, and investors are closely monitoring the outcome of the policy meeting." 

Trade volume was lower, with deals aggregating INR 146.29 billion being recorded on the National Stock Exchange and the BSE combined, down from INR 185.81 billion on Friday.

Bonds issued by REC, HDFC Bank, Suryapet Khammam Road, Apex Homes, National Bank for Financing Infrastructure and Development, Vedanta, National Bank for Agriculture and Rural Development, Bajaj Finance, Ultratech Cement, National Housing Bank, Trust Investment Advisors, and Mahindra & Mahindra Financial Services were among the most traded on the exchanges.

In the primary market, too, activity remained moderate. NaBFID raised INR 57.09 billion through two bonds of different maturities. The company raised INR 14.69 billion through bonds maturing on Apr. 8, 2030 at a coupon of 7.03, and raised INR 42.40 billion through bonds maturing on Apr. 7, 2035 at a coupon of 7.04%.

On Tuesday, several non-banking companies have lined up bond issuances. Bajaj Finance has invited bids to raise up to INR 40 billion through bonds maturing on Apr. 3, 2035, and Shriram Finance has sought bids for two bonds of different maturities, aiming to raise INR 37.50 billion. Bajaj Housing Finance has invited bids to raise INR 15.00 billion through bonds maturing in 10 years. LIC Housing Finance will seek bids for its bonds maturing on Feb. 21, 2030 to raise INR 20.00 billion. Piramal Enterprises and Cholamandalam Investment and Finance Co. also plan to raise funds.

Market participants anticipate a surge in primary issuances after the outcome of the RBI's policy meeting. "We expect a growth in number of issuances once people have more clarity on rates post MPC outcome," a fund manager at a mid-sized mutual fund house said.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 144.20 million were traded at a weighted average yield of 7.0483-7.9979%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Monday.

* INR 93.30 million of Rajasthan's Mar. 31, 2026; Mar. 15, 2026; Jun. 23, 2025; Feb. 7, 2027; and Jun. 23, 2026 bonds were dealt at a weighted average yield of 7.0483%-7.9979%

* INR 22.50 million of Chhattisgarh's Mar. 28, 2029 and Mar. 28, 2031 bonds were dealt at a weighted average yield of 7.0991%-7.1531%

* INR 11.60 million of Haryana's Mar. 31, 2026 bonds were dealt at a weighted average yield of 7.3009%

* INR 7.00 million of Telangana's Mar. 7, 2032 bonds were dealt at a weighted average yield of 7.0686%

* INR 5.00 million of Uttar Pradesh's Jun. 2, 2027 bonds were dealt at a weighted average yield of 7.1983%

* INR 2.80 million of Tamil Nadu's Feb. 22, 2031 bonds were dealt at a weighted average yield of 7.0802%

* INR 2.00 million of Jharkhand's Mar. 30, 2031bonds were dealt at a weighted average yield of 7.0996%

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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