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Informist, Friday, Jul. 18, 2025

By Vaishali Tyagi

MUMBAI – Corporate bond yields fell marginally across tenures Friday, tracking a decline in yields on government securities, dealers said. Government securities yields fell marginally during the day after the cut-off yield on the 7.09%, 2054 bond was 6.98%, lower than expectation, according to dealers. An Informist poll median of 13 estimates saw the cut-off yield at 6.99%.

However, the 10-year benchmark 6.33%, 2035 gilt closed at 6.31%, against 6.30% yield, Thursday, largely unchanged. The most traded 6.79%, 2034 bond closed flat at 6.36%, against previous day.

"The movement in corporate bond yields was largely due to gilt auction, with yields dropping 1-2 basis points in line with the trend in government securities," a dealer at a brokerage firm said. "Apart from it, some buying and selling came according to their particular requirments, but no major bets are there from traders as there is no guidance...some traders are going long (buying) and short (selling). 

The 7.09%, 2054 bond cut-off yield was lower than expectations, likely due to firm bids from state-owned and private-sector insurance companies and pension funds. Banks bid for the new five-year, 2030 bond for both their trading and investment books, dealers said. There was replacement demand for the 2030 gilt after banks sold gilts maturing in 2026-27 (Apr-Mar) worth INR 199.25 billion to the government at the buyback auction Thursday. However, some dealers were expecting a coupon of 5.99%, or 6.00% on the bond, whereas the coupon was set at 6.01%, in line with the median of an Informist poll estimate. 

On Friday, in the secondary market of corporate bonds, while mutual funds were the major buyers, banks and a handful of corporate entities were on the selling side, dealers said. A few pension funds and insurance companies were seen both buying and selling bonds across tenures but in low volume. 

Deals aggregating INR 98.96 billion were recorded on the National Stock Exchange and the BSE combined Friday, sharply lower than INR 140.35 billion reported Thursday. Papers issued by Larsen And Toubro Ltd., REC Ltd., Housing & Urban Development Corp. Ltd., Indian Railway Finance Corp. Ltd., State Bank of India, Apex Homes Pvt Ltd., LIC Housing Finance Ltd., Cholamandalam Investment And Finance Company Ltd., Power Finance Corp. Ltd., National Bank For Agriculture And Rural Development, Small Industries Development Bank of India and Power Grid Corp. of India Ltd. were the most traded on the exchanges.

On the primary market side, no large number of issuances were lined up Friday to raise funds except with one state-owned entity. THDC India Ltd. raised INR 6.0 billion through 10-year bond at a coupon of 7.45%. According to the bid book accessed by Informist, the company received 72 bids aggregating to INR 21.99 billion in the coupon range of 6.98-7.80%. Also, Macrotech Developers Ltd. raised INR 3.50 billion through issuance of bonds maturing on Jan. 1, 2028, at a coupon of 8.19%.

"THDC received a fine response for its bond issue, and the coupon rate was largely in line with expectations," a fund manager at a mid-sized mutual fund house said. "Given the small issue size and the 'AA' rating of the bond, the rate is considered fair." The THDC India bonds have been rated 'AA' by CARE Ratings. 

Going forward, merchant bankers expect primary market issuances to increase in the corporate debt market. Some banks may tap the market as many of these received board approvals to raise funds through corporate bonds. 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bond aggregating to INR 46.00 million was traded at a weighted average yield of 6.4008%, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching System showed.

* INR 46.00 million of Haryana's 2026 bond was dealt at a weighted average yield of 6.4008%

BENCHMARK LEVELS FOR CORPORATE BONDS: 

End

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

Edited by Deepshikha Bhardwaj

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