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Informist, Thursday, May 8, 2025

By Ashna Mariam George

MUMBAI – Yields on corporate bonds surged in the secondary market Thursday as tensions between India and Pakistan escalated, dealers said. Yields on three-year and five-year bonds rose by 7-8 basis points and that on 10-year bonds were up by 5-6 bps as selling pressure mounted, dealers said.

"By the second half, market understood the (tension) scenario was not over yet and there are chances of constant escalation from both sides, which impacted all asset classes," a fixed income fund manager at a mid-sized mutual fund house said. "Until and unless both parties come to terms on a peace agreement, we are not sure how the issue will resolve."

The Indian defence ministry said Pakistan Wednesday night tried to engage military targets in northern and western India using drones and missiles. The Indian armed forces targeted air defence radars and systems at several locations in Pakistan and neutralised at least one air defence system in Lahore, the defence ministry said in a release.

The ministry also said 16 civilians, including three women and five children, were killed in Pakistani firing. The ministry said Pakistan has increased the intensity of "unprovoked firing" across the Line of Control with mortars and heavy calibre artilleries to target multiple areas.

According to various media reports, Pakistan's military on Thursday said 25 Indian drones were neutralised at multiple locations. It also said one civilian was killed and four Pakistani army personnel were wounded in a drone attack.

Dealers said the situation has created panic among market participants who sold bonds Thursday. "There was selling pressure because of the (military) operation and there is panic because people are not sure what will happen tomorrow," a dealer at a mid-sized brokerage firm said.

Foreign banks were the biggest sellers Thursday, along with a few mutual funds, while banks were on the buying side, dealers said. Most of the activity was concentrated on the shorter end of the curve. In the secondary market, deals aggregating to INR 186.04 billion were recorded on the National Stock Exchange and the BSE combined, up from INR 138.03 billion reported Wednesday.

Papers issued by the National Bank for Agriculture and Rural Development, the Housing and Urban Development Corp., the Indian Renewable Energy Development Agency, the Telangana State Industrial Infrastructure Corp., and LIC Housing Finance were traded the most on exchanges.

Issuances in the primary market were low Thursday without any big ones during the day. On Friday, IndiGrid Infrastructure Trust has invited bids to raise INR 3 billion through bonds maturing on Sept. 27, 2028. HDB Financial Services will also tap the market Friday to raise up to INR 6 billion by reissuing bonds maturing on May 5, 2028. Tata Motors has invited bids to raise up to INR 5 billion through three-year bonds maturing on May 11, 2028 and May 12, 2028.

UDAY BONDS

In the secondary market, Rajasthan's Feb. 7, 2027, Ujwal DISCOM Assurance Yojana bonds aggregating INR 4 million were traded at a weighted average yield of 6.3160%, data from the RBI's Negotiated Dealing System–Order Matching System showed Thursday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Ashish Shirke

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