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Informist, Wednesday, May 7, 2025

By Ashna Mariam George

MUMBAI – Corporate bond yields changed little in the secondary market Wednesday as market participants were cautious about the conflict between India and Pakistan escalating, dealers said. Market participants remained vigilant after reports that Pakistan had begun firing along the Line of Control in Jammu and Kashmir in retaliation to the Indian air strikes early Wednesday.

India's armed forces launched 'Operation Sindoor' early Wednesday at nine sites in Pakistan and Pakistan-occupied Kashmir from where terrorists were suspected to be operating. "Yields did not move because till yesterday there was uncertainty... now that we are past the day of action, there are high chances that the issue won't escalate, because we might not do anything and the ball is in their (Pakistan) court... it doesn't seem like there will be a full-blown war," a fund manager at a mid-sized mutual fund house said. If tensions do increase, yields will go up by 5-10 basis points, he added.

Though market participants do not expect a full-fledged war, they are keeping an eye on how Pakistan would react. "I think time is a great healer. As more and more time passes and nothing significant seems to happen, markets might just forget," a dealer at a mid-sized private-sector bank said.

In the secondary market, deals aggregating to INR 138.03 billion were recorded on the National Stock Exchange and the BSE combined, down from INR 144.03 billion reported Tuesday. "There was a little bit of selling as some traders tried to exit their positions, but it did not impact the yields," a dealer at a mid-sized broking firm said.

While mutual funds and insurance companies were on both buying and selling sides, banks and pension funds were largely inactive, dealers said. The papers traded most Wednesday were those issued by the National Bank for Agriculture and Rural Development, the Small Industries Development Bank of India, the Telangana State Industrial Infrastructure Corp., HDFC Bank, and Kotak Mahindra Prime. 

In the primary market, The Export-Import Bank of India scrapped its 10-year bond issuance worth INR 25 billion, as investors demanded a coupon higher than the issuer's expectation. This is the second time in a week that an issuer has scrapped an issuance due to the coupon being higher than expected. On Apr. 30, the Power Finance Corp. had scrapped two bond issuances--one maturing on Apr. 16, 2040, and a zero-coupon bond maturing on Jun. 2, 2035.

However, another state-owned entity NTPC raised the full quantum of INR 40 billion through a 10-year bond at 6.84%. "The supply (of NTPC bonds) is pretty minimal in the market. Also things depend on the issuer's expectation... NTPC seems to be okay to sell at those levels," the fund manager quoted earlier said. Insurance companies and pension funds were the major investors in the issue, dealers said. 

Andhra Pradesh Mineral Development Corp. has invited bids Thursday to raise up to INR 89.9991 billion through bonds with staggered redemptions, maturing on May 8, 2035. Qburst Software Services and Vedika Credit Capital are also in line to tap the market Thursday.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 10.60 million were traded at a weighted average yield of 6.3236-6.5337%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Wednesday.

* INR 6.60 million of Uttar Pradesh's Jun. 2, 2028, bonds were dealt at a weighted average yield of 6.5337%

* INR 4.00 million of Rajasthan's Feb. 7, 2027, bonds were dealt at a weighted average yield of 6.3236%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Rajeev Pai

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