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Informist, Tuesday, Jul. 1, 2025

By Vaishali Tyagi and Siddhi Chauhan

MUMBAI – Yields on three-year corporate bonds fell 2-3 basis points as mutual funds aggressively bought these papers, dealers said. Buying interest from mutual funds increased due to inflows, pulling down the yields on three-year paper, they said. However, yields on five- and 10-year corporate bonds remained broadly unchanged. 

"There was buying in the three-year segment from mutual funds. Redemption pressure is now over, and they (mutual funds) have received inflows in the new quarter, so they are buying to deploy that cash," a dealer at a brokerage firm said. "Five-year and 10-year bonds were steady because there were no major trades in those segments. Only requirement-based trade happened in these segments, which was not enough to move the levels."

While some market participants said banks were largely on the sidelines as they waited to analyse conditions at the beginning of the new quarter, a few others said that they likely sold in small volumes. Some mutual funds were seen on both the buying and selling side to manage their portfolios, dealers said. "They (mutual funds) are selling the longer-tenure paper and then buying the shorter-tenure bonds as they offered a better spread," a dealer at another brokerage firm said. 

Trade volume in the secondary market was significantly higher, with deals aggregating to INR 190.16 billion recorded on the National Stock Exchange and BSE combined at 1800 IST, compared with INR 115.42 billion Monday.

Papers issued by REC, Indian Railway Finance Corp., National Bank for Agriculture and Rural Development, Aditya Birla Capital, Power Finance Corp., Telangana State Industrial Infrastructure Corp., HDB Financial Services, Samvardhana Motherson International, Kalpataru Properties and State Bank of India traded the most on the bourses.

In the primary market, activity was subdued Tuesday. On Wednesday, several companies like JM Financial Credit Solutions, Earlysalary Services, and Muthoot Capital Services 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 corporate bonds.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 7.00 million were traded at a weighted average yield of 5.95%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.

* INR 3.50 million of Rajasthan's 2026 bond was dealt at a weighted average yield of 5.95%

* INR 3.50 million of Haryana's 2026 bond was dealt at a weighted average yield of 5.95%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Saji George Titus

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