India Corporate Bonds
Need-based trading keeps yields steady, volumes down
This story was originally published at 21:14 IST on 15 April 2025
Register to read our real-time news.Informist, Tuesday, Apr. 15, 2025
By Vaishali Tyagi
MUMBAI – Yields on corporate bonds ended steady in the secondary market Tuesday as trading was limited to need-based trading amid lower volume, dealers said. Investors are waiting for a fresh supply of bonds into the secondary market to deploy their funds, they said.
"See, overall the market remained dull today (Tuesday), and whatever trading happened it was all need-based," a fund manager at a mid-sized mutual fund house said. "Most secondary market investors are waiting for new issuances to invest and this wait-and-watch approach is likely to continue until new bond issuances by state-owned entities or large financial institutions hit the market."
Dealers expect a surge in bond issuances towards the end of April as companies receive borrowing approvals from their boards at the time of quarterly earnings. The influx of fresh bond supply could potentially impact yield levels in the secondary market, dealers said.
In the secondary market, deals aggregating INR 99.74 billion were recorded on the National Stock Exchange and BSE combined on Tuesday, down sharply from INR 135.69 billion Friday. The market saw some buying and selling from a few mutual funds, primarily in three- and five-year tenures, dealers said. Insurance companies and banks were seen buying papers across tenures, they added. Pension funds remained on the sidelines. Financial markets were shut Monday for Ambedkar Jayanti.
Papers issued by the Advance India Projects, REC, Tata Steel, National Bank For Financing Infrastructure and Development, Telangana State Industrial Infrastructure Corp., National Bank for Agriculture and Rural Development, Mahindra Rural Housing Finance and India Infradebt were the most traded on the exchanges.
Activity in the primary market was moderate Tuesday, with only one major issue being recorded. The National Bank for Agriculture and Rural Development raised INR 70 billion through the re-issuance of bonds maturing on Sept. 15, 2028, at a yield of 7.00%. According to the bid book accessed by Informist, the issue garnered 118 bids aggregating INR 120.40 billion. The company had originally issued the bonds on Feb. 21 at a coupon of 7.6450%.
"The cut-off was mostly in line with expectations, with minor deviations of 1-2 basis points," the dealer quoted above said. "It was well received by the market which showed a positive market response to the bond issuance and investors appetite."
On Wednesday, a few non-banking financial companies are in line to borrow funds from the market. Bajaj Finance has invited bids to raise INR 30 billion through bonds maturing on Jun. 26, 2028.
Market participants also assessed the release of India's CPI inflation for March. Corporate bond yields did not react to the lower-than-expected CPI inflation as expectations on the rate cut cycle remained unchanged.
CPI inflation fell to an over-five-year low of 3.34% in March. It was also lower than the consensus estimate of 3.61% in an Informist poll. "There was a muted response in the corporate bond market after the CPI data release and it did not alter any market expectations," a dealer at another mid-sized brokerage firm said.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 29.20 million were traded at a weighted average yield of 6.3428-6.7698%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.
* INR 19.70 million of Rajasthan's Mar. 31, 2026; Mar. 15, 2026 and Jun. 23, 2025 bonds were dealt at a weighted average yield of 6.3628%-6.6599%
* INR 6.50 million of Tamil Nadu's Feb. 22, 2028; Feb. 22, 2031; and Feb. 22,2032 bonds were dealt at a weighted average yield of 6.5734%-6.7698%
* INR 3.0 million of Haryana's Mar. 31, 2026 bonds were dealt at a weighted average yield of 6.3428%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | TUESDAY | FRIDAY |
Three-year | 7.02-7.05% | 7.04-7.06% |
Five-year | 7.00-7.03% | 7.00-7.02% |
10-year | 7.01-7.02% | 7.01-7.03% |
End
Edited by Saji George Titus
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