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Informist, Friday, Jul. 11, 2025

By Siddhi Chauhan

MUMBAI – Yields on the three- and five-year corporate bonds rose by 3-4 basis points Friday after the Reserve Bank of India conducted seven-day variable rate reverse repo auction, dealers said. Meanwhile, the yields on the 10-year paper remained largely flat due to limited activity by market players, they added.

Yields on the short-term bonds were up from the start of the session on account of a higher-than-expected quantum for variable rate reverse repo auction. After market hours Thursday, the RBI announced INR-2.5-trillion variable rate reverse repo auction while traders had estimated the notified amount to be INR 1.5 trillion to INR 2 trillion, dealers said. At the seven-day variable rate reverse repo auction on Friday, the central bank got bids worth INR 1.52 trillion which was fully accepted by the central bank at a cut-off 5.49%.

Owing to this, the overnight call rate opened at 5.55%, the highest opening level in over a month. Consequently, banks and mutual funds sold papers maturing in up to five years in the secondary market resulting in yields to rise, dealers said. The rise was limited due to some buying from same entities at lucrative levels, dealers said.

"Yields on the three-year and five-year paper rose because mutual funds and banks sold these bonds due to VRRR," a dealer at a brokerage firm said. "Since 10-year is not as sensitive to this, the impact was not seen here." Pension funds were seen selling the 10-year paper in light volumes.

Trade volumes in the secondary market were low for the fifth consecutive session, with deals aggregating to INR 67.51 billion recorded on the National Stock Exchange and BSE combined at 1800 IST, largely similar to INR 87.19 billion the previous session.

Papers issued by Indian Railways Finance Corp., Radiance Renewables, LIC Housing Finance and National Bank For Agriculture And Rural Development were the traded most on bourses.

In the primary market, volume was slightly muted Friday with very few non-banking financial companies and corporate entities tapping the corporate debt market. On Monday, Mahindra & Mahindra Financial Services, L&T Finance, Tata Capital and Navi Finserv plans to tap the corporate bond market. Dealers expect issuances might pick up by state-owned entities in near term. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 190.20 million were traded at a weighted average yield of 6.6741-7.0782%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed Tuesday.

* INR 10.00 million of Punjab's Mar. 31, 2028, bond was dealt at a weighted average yield of 6.9468%

* INR 11.30 million of Telangana's Mar. 7, 2029, bond was dealt at a weighted average yield of 6.7969%

* INR 46.00 million of Haryana's Mar. 31, 2032, bond was dealt at a weighted average yield of 6.6788%

* INR 13.00 million of Tamil Nadu's Feb. 22, 2028, bond was dealt at a weighted average yield of 6.6966%

* INR 22.50 million of Rajasthan's Mar. 15, 2026, bond was dealt at a weighted average yield of 6.6741%

* INR 30.00 million of Uttar Pradesh's Jun. 2, 2028, bond was dealt at a weighted average yield of 6.7945%

* INR 25.20 million of Uttar Pradesh's Mar. 21, 2028, bond was dealt at a weighted average yield of 6.7964%

* INR 13.00 million of Uttar Pradesh's Jun. 2, 2027, bond was dealt at a weighted average yield of 6.6913%

* INR 10.00 million of Uttar Pradesh's Mar. 2, 2027, bond was dealt at a weighted average yield of 6.6891%

* INR 9.20 million of Uttar Pradesh's Mar. 21, 2031, bond was dealt at a weighted average yield of 7.0782%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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