India Corporate Bonds
Ylds in narrow band; traders focus on qtr-end target
This story was originally published at 20:27 IST on 26 June 2025
Register to read our real-time news.Informist, Thursday, Jun. 26, 2025
By Vaishali Tyagi
MUMBAI – Corporate bond yields in the secondary market moved in a narrow range Thursday, as traders focused on meeting portfolio requirements ahead of the Apr-Jun quarter end, dealers said. "Barely, 1-2 days are left in this quarter, the market is hectic, and quotes were coming in throughout the day," a dealer at a mid-sized brokerage firm said. "Participants from all segments were actively trading papers across various tenures, and there was demand for papers across the board."
As the quarter-end is approaching, market participants are prioritising target fulfilment. "Traders are assessing their portfolio requirements as corporate entities, mutual funds and insurance companies are focused towards meeting their targets and readjusting their positions," the dealer quoted above said.
Dealers said investors with ample cash bought papers before the variable rate reverse repo auction scheduled for Friday. The Reserve Bank of India, after market hours Tuesday, announced a INR-1.0-trillion seven-day VRRR operation. Dealers expect the move to drain liquidity from the system, and anticipate that there will be a dent in investors' appetite, which may lead to a rise in corporate bond yields.
Despite the good number of issuances in the primary market, investors remained focused on the secondary market, restructuring their portfolios in anticipation of the liquidity impact from the VRRR auction.
On Thursday, trade volume in the secondary market was lower with deals aggregating to INR 127.79 billion recorded on the National Stock Exchange and BSE combined, compared with INR 165.49 billion Wednesday. Mutual Funds were said to be aggressively selling 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, sold bonds across tenures, as per the dealers.
Several companies were lined up on Thursday to raise funds from the corporate debt market. ICICI Bank raised INR 10.0 billion by issuing bonds maturing in 15 years at a coupon of 7.45%. State-owned Rashtriya Chemicals and Fertilizers raised INR 3 billion through a three-year bond at 7.49%. According to the bid book accessed by Informist, the company received 10 bids aggregating INR 5.25 billion in the range of 7.19-7.58%.
On Friday, Shriram Finance will tap the corporate bond market to raise INR 5.0 billion by reissuing bonds maturing on May 18, 2027. Bajaj Housing Finance has invited bids to raise up to INR 10 billion by reissuing bonds maturing on May 26, 2028, and Hinduja Leyland Finance has sought bids to raise INR 1 billion through two-year bonds. Vivriti Capital, AK Capital Finance and Arman Financial Services will also raise funds from the corporate debt market Friday.
Merchant bankers expect a surge in primary market issuances as the June quarter-end is approaching. Banks and corporates are likely to rush to meet their quarterly borrowing targets, leading to a flurry of new deals in the coming days. "Some banks got approval to raise funds through bond issuances, so we expect them to tap and raise funds early next month, depending on their requirement," a dealer at another mid-sized brokerage firm said.
UDAY BONDS
In the secondary market, Uttar Pradesh's 8.75%, 2030 Ujwal DISCOM Assurance Yojana bond aggregating INR 44 million was traded at a weighted average yield of 6.6012%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Thursday.
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | THURSDAY | WEDNESDAY |
Three-year | 6.72-6.75% | 6.71-6.74% |
Five-year | 6.83-6.87% | 6.83-6.86% |
10-year | 7.04-7.08% | 7.04-7.07% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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