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Informist, Monday, Jun. 30, 2025

By Vaishali Tyagi and Siddhi Chauhan

MUMBAI – Yields on corporate bonds rose in the secondary market Monday due to selling pressure from mutual funds facing cyclical redemption, dealers said. Banks and insurance companies also sold bonds to manage their portfolio, which pushed yields higher, they added.

The yield on the 10-year benchmark bond issued by the National Bank for Agriculture and Rural Development rose by 2-3 basis points. Yields on three-year and five-year bonds rose by 2 bps. Traders attributed this to sustained selling from mutual funds.

"Quarter-end redemption pressure is driving selling activity, primarily from mutual funds, banks, and insurance companies, which pushed yields 2-3 basis points higher," said a fund manager at a mid-size mutual fund house. Some corporate entities were active sellers, adding to the market strain and pushing yields higher. However, their impact was partially offset by buying from pension funds across tenures but mainly in longer tenures.

Trade volume in the secondary market was significantly lower, with deals aggregating to INR 115.42 billion recorded on the National Stock Exchange and BSE combined at 1800 IST, compared with INR 106.48 billion Friday. Mutual funds and banks were selling papers across tenures. Insurance companies were said to be selling in the longer segment. Some mutual funds and private sector banks were buying, especially shorter tenure bonds, dealers said.

Papers issued by REC, Indian Railway Finance Corp., LIC Housing Finance, Power Finance Corp., Telangana State Industrial Infrastructure Corp., NIIF Infrastructure Finance, HDB Financial Services were traded the most on the bourses.

In the primary market, activity remained subdued Monday. On Tuesday, several companies like Ekamaya Properties, Vyapak Properties, and Lakadia Banaskantha are set to raise funds. 

Traders expect a rise in issuances in the near term, especially from banks. The boards of Indian Bank and Canara Bank have approved raising funds through the corporate bond market.

UDAY BONDS

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

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Ashish Shirke

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