India Corporate Bonds
Yields down on active buying from mutual funds, banks
This story was originally published at 20:39 IST on 3 July 2025
Register to read our real-time news.Informist, Thursday, Jul. 3, 2025
By Siddhi Chauhan
MUMBAI – Yields on corporate bonds Thursday fell due to buying interest from mutual funds and banks that aggressively bought papers due to availability of ample funds, dealers said. Primary market volume remained dull for the third consecutive day due to the absence of any significant issuance, they added.
"Today, (Thursday) there was good buying interest from mutual funds and banks," a dealer at a mid-sized brokerage firm said. "Mutual funds and banks, were also active on the selling side but in less volumes. They are trading according to the levels which they find attractive."
Mutual funds are deploying the cash which they have received after the start of the month, while banks are also flushed with funds due to abundant banking system liquidity, dealers said.
On Wednesday, the net liquidity absorbed by the RBI rose to the highest level since Jun. 1, 2022. The RBI net absorbed INR 3.75 trillion from the banking system, significantly higher than INR 3.32 trillion Tuesday, central bank data showed. The comfortable liquidity was also evident from the funds parked by banks under the Standing Deposit Facility on Wednesday which rose to INR 2.99 trillion from INR 2.55 trillion Tuesday.
Trade volume in the secondary market was slightly lower, with deals aggregating to INR 169.91 billion recorded on the National Stock Exchange and BSE combined at 1800 IST, compared with INR 202.19 billion Wednesday.
Papers issued by REC, Tata Capital Housing Finance, HDFC Bank, State Bank of India, Porteast Investment, Nuvoco Vistas, and National Bank For Agriculture And Rural Development were traded the most on bourses.
In the primary market, activity remained subdued. Market participants expect issuances to rise gradually with banks dominating the primary market, dealers said. The boards of Indian Bank and Canara Bank have approved raising funds through corporate bonds.
On Friday, IIFL Finance Ltd. plans to raise up to INR 2 billion through bonds maturing on Oct. 7, 2026, sources told Informist. Bidding will take place on the National Stock Exchange's electronic platform from 1100 IST to 1200 IST. The issue has a base size of INR 500 million and a greenshoe option of INR 1.50 billion. Other than IIFL Finance, Clix Capital Services, IIFL Finance, IIFL Samasta Finance, Edel Finance and Muthoot Capital Services will also tap the market Friday, according to sources.
UDAY BONDS
In the secondary market, Uttar Pradesh's 8.38%, 2027 Ujwal DISCOM Assurance Yojana bond aggregating INR 5 million was traded at a weighted average yield of 6.2526%, 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 | 6.68-6.70% | 6.71-6.73% |
Five-year | 6.78-6.80% | 6.83-6.86% |
10-year | 7.03-7.06% | 7.08-7.10% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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