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Informist, Tuesday, Jun. 17, 2025

By Vaishali Tyagi

MUMBAI – Yields on three-year and five-year corporate bonds fell 4-5 basis points in the secondary market Tuesday as mutual funds and private-sector banks actively bought paper in these tenures, dealers said. Secondary market activity rose as the primary market lacked significant issuances, they added. However, the yields on 10-year corporate bonds fell only 2-3 bps owing to lower demand from market participants, they added. 

"Activity was higher than yesterday (Monday), we saw a lot of buying interest, especially from mutual funds, and most investors are flocking to secondary market these days," a dealer at a mid-sized brokerage said. Yields declined as buying interest was seen, especially in the shorter-to-mid segment, in the early trading hours. Buying activity picked up on availability of ample cash with mutual funds and other investors as banking system liquidity remained above INR 2.00 trillion, dealers said. However, the fall was limited by selling from select mutual funds and foreign institutional investors later in the day, they added.

Apart from buying pressure, active portfolio churning by banks and foreign institutional investors possibly contributed to the fluctuation in bond yields. Dealers said traders are reallocating their positions in shorter-tenure bonds in the secondary market.

Tuesday, trading activity rose in the secondary market. Deals worth INR 150.98 billion were recorded on the National Stock Exchange and the BSE combined, up from INR 94.97 billion Monday. Some mutual funds and private-sector banks were reportedly active buyers, but mutual funds were also seen selling actively, though in low volumes. A handful of insurance companies also traded paper by being active on both the buying and selling sides. Pension funds remained on the sidelines, dealers said

Paper issued by REC Ltd., LIC Housing Finance Ltd., Power Finance Corp. Ltd., National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, and State Bank of India were traded the most on the exchanges.

In the primary market, activity remained low. Wednesday, several non-banking finance companies have lined up to raise funds from the corporate bond market. No state-owned companies were slated to tap the market until the time of reporting. Wednesday, LIC Housing Finance will raise up to INR 36.00 billion through bonds maturing on Sept. 17, 2027. Sammaan Capital Ltd. has sought bids to raise up to INR 6.00 billion through four bonds of varying maturities. IndoStar Capital Finance Ltd. and Hinduja Leyland Finance Ltd. will raise INR 4.00 billion and INR 500 million through their respective bonds. 

As the end of the June quarter approaches, merchant bankers expect a flurry of primary market issuances, with companies aiming to meet their quarterly borrowing targets. 

UDAY BONDS

Ujjwal DISCOM Assurance Yojana bonds were not traded in the secondary market Tuesday, as per the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Subhojit Sarkar

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