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Informist, Wednesday, Apr. 30, 2025

By Ashna Mariam George

MUMBAI – Yields on corporate bonds in the secondary market ended steady on Wednesday as market participants were cautious about escalation in tensions between India and Pakistan, dealers said. "There was no major movement in yields but everyone remains cautious. So, there was a little bit of selling pressure," a dealer at a mid-sized brokerage firm said. 

The market has been cautious since Apr. 22, when terrorists killed 26 tourists in Pahalgam, Jammu & Kashmir. On Tuesday night, the Pakistani army initiated unprovoked firing across the Line of Control and the international border in Jammu and Kashmir, an Indian Army official told reporters on Wednesday. Dealers said given the developing situation, market participants did not want to take positions since the market will be shut on Thursday on account of Maharashtra Day and Labor Day.

Lower participation led to a fall in trade volumes on Wednesday, with deals aggregating to INR 117.87 billion being recorded on the National Stock Exchange and the BSE combined, lower than INR 161.31 billion reported on Tuesday. In the secondary market of corporate bonds, mutual funds were active on both the buying and selling sides, while some foreign banks were on the selling side, dealers said. 

Most bonds traded on Wednesday were those issued by the National Bank for Agriculture and Rural Development, the Small Industries Development Bank of India, the Indian Railway Finance Corp., the Telangana State Industrial Infrastructure Corp., and HDFC Bank.  

In the primary market, Power Finance Corp. scrapped two issuances worth INR 60 billion due to lower than expected demand. The company planned to raise up to INR 25 billion through bonds maturing on Apr. 16, 2040, and up to INR 35 billion through zero-coupon bonds maturing on Jun. 2, 2035. "Levels were higher because the demand was coming low, probably because of the border tensions," a fixed income fund manager at a mid-sized mutual fund house said. 

"The bidding was not aggressive also because investors had already sold REC (zero-coupon bonds) at higher levels, so they demanded higher levels for PFC, and big investors like LIC (Life Insurance Corp. of India) was not participating," the fund manager said. In September, REC had raised INR 50 billion through a zero-coupon bond at a yield of 6.2483%, which saw aggressive demand and was oversubscribed almost 10 times. 

According to the bid book accessed by Informist, Power Finance Corp's zero-coupon bond got only 59 bids in the coupon range of 6.35-7.01%. The 15-year issue received only 64 bids in the range of 6.81-7.10%. 

The primary market is packed with issuances worth INR 65 billion on Friday. Housing and Urban Development Corp. has invited bids to raise up to INR 30 billion through five-year bonds. NHPC will tap the market to raise up to INR 20 billion through 15-year bonds. Indian Renewable Energy Development Agency is also in line to raise INR 15 billion on Friday through bonds maturing in May 2030.

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Wednesday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Avishek Dutta

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