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Informist, Tuesday, Jun. 24, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds in the secondary market remained in a narrow range Tuesday as traders focused on meeting portfolio requirements ahead of the Apr-Jun quarter end, dealers said. "It was slightly hectic throughout the day as participants from all segments traded paper across tenures. Whatever supply came, it matched the demand, so no major impact on yields was seen," a dealer at a mid-sized brokerage firm said. "Shorter-to-mid segment papers are currently the most liquid while longer-tenure papers are experiencing low liquidity."

With the quarter-end approaching, market participants are focused on meeting their targets, especially as this marks the close of the first quarter of 2025–26 (Apr–Mar). "Every entity needs funds for their disbursement targets, so traders are prioritising portfolio requirements right now," the dealer quoted above said. "...and above all, some mutual funds are being very aggressively trading papers these days as they also face redemption pressure due to month-end."

On Tuesday, trade volume in the secondary market was significantly higher with deals aggregating to INR 192.00 billion recorded on the National Stock Exchange and BSE combined, compared with INR 121.36 billion Monday. Mutual Funds were said to be aggressively selling and buying paper across tenures due to their portfolio requirement, dealers said. State-owned banks also sold long tenure bonds. Other participants including private sector banks, insurance companies, and pension funds also traded paper but majorly in one- to three- year segment, as per the dealers.

"Shorter tenures are the most volatile these days, with most buying and selling happening in that segment. Some participants with ample liquidity are deploying (buying) funds while others are selling due to persisting geopolitical uncertainty following reports that Iran had violated the ceasefire and Israel vowed to respond with force," a fund manager at a mid-size mutual fund house said. 

Bonds issued by REC, Embassy office Parks REIT, National Bank For Financing Infrastructure And Development, The Andhra Pradesh Mineral Development Corp., LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., and National Bank For Agriculture And Rural Development were traded the most on bourses.

On Tuesday, several non-banking financial companies were lined up to raise funds from the corporate debt market, however, the deals were not confirmed till the time of reporting. On Wednesday, Highways Infrastructure Trust will tap the corporate bond market to raise INR 12.0 billion through issuance of bonds maturing in three years. Muthoot Finance Ltd. has invited bids to raise up to INR 10 billion through issuance of bonds maturing on Nov. 25, 2027. Aditya Birla Housing Finance has invited bids to raise INR 5 billion through five-year bonds. Aavas Financiers, L&T Finance, and Varthana Finance Pvt. Ltd. will also raise funds from the corporate debt market through their respective bonds.

The Reserve Bank of India after market hours Tuesday announced a INR-1.0-trillion seven-day variable rate reverse repo operation Friday. Dealers expect this move to drain liquidity from the system, potentially impacting investor appetite and leading to a rise in corporate bond yields.

Merchant bankers anticipate a surge in primary market issuances as the Apr-Jun quarter-end approaches. Banks and corporate entities are expected to rush to meet their quarterly borrowing targets, leading to a flurry of new issuances in the coming days.

UDAY BONDS 

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 3.50 million were traded at a weighted average yield of 6.0758-6.6271%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.

* INR 2.00 million of Jharkhand's Mar. 30, 2031 bond was dealt at a weighted average yield of 6.6271%

* INR 1.50 million of Rajasthan's Jun. 23, 2026 bond was dealt at a weighted average yield of 6.0758%

End

Edited by Subhojit Sarkar

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