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Informist, Wednesday, May 28, 2025

By Ashna Mariam George 

MUMBAI – Secondary market yields of three- and five-year bonds were marginally down Wednesday as cut-offs on issuances in the primary market were slightly lower than expectations, dealers said. The yields were down 1-2 basis points amid low volumes in the secondary market, they said.

"Only some big mutual funds and banks were active today (Wednesday), most others were not present... it was basically churning of portfolio," a dealer at a mid-sized brokerage firm said. Mutual funds and banks were active on both the buying and selling side, dealing in papers maturing up to five years, the dealer said. 

In the secondary market, deals aggregating INR 136 billion were recorded on the National Stock Exchange and the BSE combined, down from INR 148.84 billion reported Tuesday. Papers issued by the REC, National Bank for Agriculture and Rural Development, Telangana State Industrial Infrastructure Corp., HDFC Bank, State Bank of India, and Bajaj Finance were traded the most on exchanges. 

Market participants believe the yields will remain steady at least until the Reserve Bank of India's Monetary Policy Committee meeting scheduled Jun. 4-6. "Market continues to remain bullish (on prices), but as of now, the levels will remain as it is till the policy," a fund manager at a large mutual fund house said.

Dealers have priced in a 25-basis-point rate cut in the June policy. "People have heavily built up their positions and after a certain point, demand tends to slow down," a fund manager at a mid-sized mutual fund house said. "Further buying can happen if there is any OMO (open market operations) announcement for June and indications of further rate cuts." 

The lower-than-expected cut-off on bonds issued in the primary market impacted the yields slightly in the secondary market, dealers said. In the primary market, NABARD raised INR 42.25 billion by re-issuing bonds maturing on Sept. 15, 2028, at a yield of 6.59%. Market participants had expected a yield of 6.60-6.61% on the bond. 

Another state-owned entity, Indian Railway Finance Corp. raised INR 30 billion each through a three-year and a five-year bond. The three-year and five-year bonds were sold at a coupon of 6.47% and 6.58%, respectively. "Both (IRFC and NABARD) the issuances got more than enough demand and the bidding was really aggressive," a dealer at another mid-sized brokerage firm said. 

On Thursday, National Bank for Financing Infrastructure and Development will tap the market to raise up to INR 50 billion through a bond maturing in five years. Bajaj Finance and Tata Capital have also invited bids Thursday to raise funds through bond offerings. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 9.80 million were traded at a weighted average yield of 6.5484-6.6686%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Wednesday.

* INR 7.00 million of Telangana's Mar. 7, 2032 bonds were dealt at a weighted average yield of 6.6686%

* INR 2.80 million of TamilNadu's Feb. 22, 2031 bonds were dealt at a weighted average yield of 6.5484%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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