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Informist, Monday, Jun. 16, 2025

By Vaishali Tyagi

MUMBAI – Corporate bond yields remained steady in the secondary market Monday, amid low trading volume, dealers said. "Activity was muted, driven mostly by requirement-based trading," a dealer at a mid-sized brokerage firm said. Mutual funds and a few state-owned banks bought papers, while some other mutual funds and insurance companies sold papers across tenures based on the requirement, which was insignificant to move the yields, the dealer said.

Yields fell only 1-2 basis points initially due to some buying interest, but recovered later in the day as mutual funds and others sold, keeping yields within a narrow range. "We saw a slight dip of 1-2 bps earlier due to buying, but selling from mutual funds later pushed yields back to their previous levels," a dealer at another mid-sized brokerage firm said."

Compared to the previous week's closing, buying activity Monday appeared higher, driven largely by mutual funds and other investors with ample cash reserves and good liquidity, dealers said. Secondary market activity rose as there haven't been many large issuances in the primary market, making existing papers in the secondary market more attractive for trading.

"Market sentiment is improving, with buying interest picking up, especially from mutual funds and other players with strong liquidity," the dealer quoted above said. "Selling interest has almost gone, and we are seeing better buying interest." On Friday, the RBI net absorbed liquidity was at INR 3.62 trillion, significantly higher than INR 2.76 trillion Thursday, central bank data showed Monday. 

In the secondary market, deals aggregating INR 44.27 billion were recorded Monday on the National Stock Exchange and the BSE combined at 1500 IST, sharply lower than INR 61.56 billion reported on Friday. Mutual Funds and state-owned banks were active on the buying side, while some mutual funds along with insurance companies were seen selling bonds across tenures. Foreign institutional investors were both selling and buying papers, while private sector banks kept on the sidelines. 

"Trading activity was largely low today (Monday), and weather conditions may have played a role in the low volumes...therefore, traders with largely big bets seen missing from the market," a dealer at another mid-sized brokerage firm said.

Papers issued by Indian Railway Finance Corp., LIC Housing Finance, Power Finance Corp., National Bank For Agriculture And Rural Development, Muthoot Finance, Small Industries Development Bank of India, were traded the most on the exchanges. In the secondary market, most large trades were executed in papers issued by state-owned entities.

On Monday, activity in the primary market was moderate. On Tuesday, several non-banking financial companies are lined up to raise funds from the corporate bond market, along with one municipal bond issuer, while no state-owned companies are slated to tap the market, until the time of reporting. 

L&T Finance will raise INR 10 billion through the reissuance of bonds maturing on Jun. 16, 2027. Gandhinagar Municipal Corp. has invited bids to raise INR 250 million through a five-year bond. Edel Finance Co., John Deere Financial India, and Vedika Credit Capital will also tap the market to raise funds through their respective papers.

Merchant bankers expect a surge in primary market issuances as the Apr-Jun quarter-end approaches. With companies looking to meet their quarterly borrowing targets, market participants expect a flurry of new issuances in the coming days, they added.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 232.50 million were traded at a weighted average yield of 6.1090-6.5996%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Monday.

* INR 174.00 million of Rajasthan's Jun. 23, 2026, Mar. 15, 2026 and Mar. 31, 2026 bonds were dealt at a weighted average yield of 6.1090-6.2834%

* INR 52.00 million of Haryana's Mar. 31, 2026 bonds were dealt at a weighted average yield of 6.1665%

* INR 6.50 million of Tamil Nadu's Feb. 22, 2032, Feb. 22, 2028, and Feb. 22, 2031 bonds were dealt at a weighted average yield of 6.2525-6.5996%

End

With inputs from Aaryan Khanna

Edited by Deepshikha Bhardwaj

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