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Informist, Thursday, May 22, 2025

By Ashna Mariam George 

MUMBAI – Corporate bond yields were marginally up, by 2 basis points, Thursday as buying pressure eased in the secondary market, dealers said. "A little bit of correction happened today (Thursday) as it happens after a rally (fall in yields)...and there were only a few buyers," a dealer at a mid-sized brokerage firm said. The supply of bonds in the secondary market was high Thursday, another dealer said. 

Yields on corporate bonds have been falling over a week as traders bought papers in expectation of a 25-basis-point rate cut by the Reserve Bank of India's Monetary Policy Committee in the upcoming policy scheduled from Jun. 4 to Jun. 7. Yields have fallen about 20-30 bps in almost over a week. 

Traders also await the RBI's surplus transfer to the government for 2024-25 (Apr-Mar), which is expected to be higher than the then-record INR 2.11-trillion given last year. "Market is looking at the dividend to an extent of 3 to 3.5 lakh crores (INR 3-3.5 trillion), which is likely to be declared tomorrow (Friday)," a fixed-income head of a mid-sized insurance company said. 

Market participants also await the outcome of the meeting the RBI held Wednesday with some banks to discuss changes to the liquidity management framework. "Further liquidity measures are expected from the RBI, especially after yesterday's (Wednesday's) meeting," a dealer at a mid-sized brokerage firm that mostly deals in secondary market said. 

Banks have asked the RBI to allow more flexibility in the maintenance of the daily cash reserve ratio, Informist reported Wednesday. According to the sources, bankers suggested the RBI to reduce the requirement of minimum daily CRR balance maintenance to as low as 80% of the fortnightly requirement from the current 90%, Informist reported. The RBI had previously reduced this level to 80% for a limited period at the start of the COVID-19 pandemic in March 2020.

In the secondary market of corporate bonds, deals aggregating INR 160.96 billion were recorded on the National Stock Exchange and the BSE combined. Mutual funds and banks were active on both buying and selling sides, while few insurance companies were buyers. 

Papers issued by the Indian Railway Finance Corp., the Telangana State Industrial Infrastructure Corp., the Power Finance Corp., the National Highway Authority of India, and Bajaj Housing Finance were traded the most on exchanges.

The primary market, too, was active Thursday. Axis Finance raised INR 10 billion through bonds maturing on Aug. 23, 2028 at 7.37% coupon. Another non-banking finance company Shriram Finance raised INR 5 billion through reissuance of bonds maturing on Apr. 9, 2028 at a yield of 8.1295%. 

On Friday, the market is packed with issuances from several non-banking finance companies. Aditya Birla Capital, HDB Financial Services, Bajaj Housing Finance, and Clix Capital Services are in line to tap the market Friday. 

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market Thursday, 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 Deepshikha Bhardwaj

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