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Informist, Wednesday, Jun. 25, 2025

By Vaishali Tyagi

MUMBAI – Corporate bond yields in the secondary market ended steady Wednesday as traders sold and purchased bonds according to their portfolio requirements, dealers said. "Trading volumes were decent, with traders across segments actively switching bonds to meet their requirements," a dealer at a mid-sized brokerage firm said. "So, whatever demand came, it was broadly settled by supply and yields remained steady without any significant movement."

Dealers said that in the past few days, traders saw significant selling pressure in the corporate bond market, driven by ongoing geopolitical uncertainty in West Asia and redemption pressures faced by some mutual funds, which pushed bond yields higher. However, this pressure eased somewhat as investor sentiment improved following the declaration of a ceasefire between Israel and Iran, prompting some mutual funds to deploy cash, thereby offsetting part of the selling pressure.

Further, dealers added that corporate bond yields initially tracked the upward movement in government bond yields, but the impact was limited as the day progressed. The rise in government bond yields was triggered by the RBI's announcement of an INR-1-trillion variable rate reverse repo auction, scheduled for Friday. This led to concerns about a transient liquidity drain, causing the yield on the 10-year benchmark 6.33% 2035 gilt to end at 6.29% higher from 6.25% Tuesday.

However, they said the impact on the corporate bond market was minimal, driven primarily by demand and supply dynamics. "The VRRR auction's impact on corporate bonds was barely seen," a fund manager at a mid-size mutual fund house said. "If the pressure in the g-sec (government securities) market sustains, we might see some spillover effects, but otherwise, I don't think it will have a significant impact."

On Wednesday, trade volume in the secondary market was lower with deals aggregating to INR 76.91 billion recorded on the National Stock Exchange and BSE combined, compared with INR 83.64 billion Tuesday. Mutual Funds were said to be aggressively selling and buying bonds across tenures due to their portfolio requirement, dealers said. Insurance companies were net buyers of bonds in longer tenures. Other participants, including private sector banks, state-owned banks, and pension funds also traded bonds across tenures, as per the dealers. 

Several non-banking financial companies were lined up on Wednesday to raise funds from the corporate debt market. Andhra Pradesh Mineral Development Corp. raised INR 55.2618 billion through reissuance of bonds maturing on May 8, 2035. On Thursday, ICICI Bank will tap the corporate bond market to raise INR 10.0 billion through issuance of bonds maturing in 15 years. Embassy Office Parks REIT has invited bids to raise up to INR 7.5 billion through issuance of bonds maturing on Mar. 19, 2027. TVS Credit Services has invited bids to raise INR 8 billion through three-year bonds. Rashtriya Chemicals and Fertilizers and Arman Financial Services will also raise funds from the corporate debt market through their respective bonds.

Merchant bankers expect a surge in primary market issuances as June quarter-end approaches. Banks and corporates are likely to rush to meet their quarterly borrowing targets, leading to a flurry of new deals in the coming days. "Several private sector banks are lined up, and multiple corporate entities are receiving board approvals to raise funds, which indicates there are a good number of bond issuances in pipeline ahead."

UDAY BONDS 

In the secondary market, Tamil Nadu's 7.90%, 2027 Ujwal DISCOM Assurance Yojana bonds aggregating INR 1.90 million were traded at a weighted average yield of 6.1378%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Wednesday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

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Edited by Deepshikha Bhardwaj

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