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Informist, Thursday, Aug. 7, 2025

 

By Vaishali Tyagi

 

MUMBAI – Corporate bond yields moved in a narrow range Thursday as trimming of positions by some traders after the Reserve Bank of India's monetary policy announcement was met by requirement-based buying by others, dealers said. "Mutual funds were selling across various tenures, (which) was largely offset by buying demand from traders looking to rebalance their portfolios, with transactions being primarily requirement-based," a dealer at a broking firm said.

 

Wednesday, the RBI's Monetary Policy Committee unanimously decided to leave the policy repo rate unchanged at 5.50% and continue with the "neutral" stance. Dealers said traders remained cautious following the knee-jerk reaction to the policy announcement, awaiting fresh cues to take positions. Market activity was mixed, with most participants focusing on meeting basic portfolio requirements. Traders trimmed their portfolios due to uncertainty over near-term rate cuts, they added.

 

Uncertainty surrounding US President Donald Trump's fresh announcement on tariffs also weighed on volume in the corporate bonds secondary market. Wednesday, Trump imposed an additional 25% tariff on Indian goods in response to New Delhi's continued trade relations with Russia. 

 

"Nobody wants to take bets in this uncertain environment... as there is no certainty, neither on the trade deal front, nor on the near-term rate scenario, therefore we expect yields to remain rangebound until some major event does take place," a dealer at another brokerage said. 

 

Though most mutual funds were selling, some were active on both the buying and selling sides, along with banks. Banks and pension funds were primarily active on the buying side, dealers said. Deals aggregating to INR 99.44 billion were recorded on the National Stock Exchange and BSE combined Thursday, down from INR 108.48 billion Wednesday. Major activity happened in paper maturing in 3-5 years.

 

Paper issued by HDFC Bank, REC, Indian Railway Finance Corp., Apex Homes, The Andhra Pradesh Mineral Development Corp., Porteast Investment, Cube Highways Trust, LIC Housing Finance, Power Finance Corp., and National Bank for Agriculture and Rural Development were traded the most on exchanges.

 

In the primary market, dealers speculated that activity would pick up after the long weekend (after Aug. 15). Friday, several companies, including NHPC, are lined up to raise funds from the debt market. NHPC has invited bids to raise INR 20.00 billion through a two-year bond. 

 

Apart from NHPC, Hinduja Leyland Finance, Navi Finserv, and Indel Money will tap the corporate bond market to raise funds Friday. 

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 39.60 million were traded at a weighted average yield of 6.1323-6.7679%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 6.60 million of Uttar Pradesh's 8.49%, 2028 bond was dealt at a weighted average yield of 6.1323%

* INR 9.20 million of Uttar Pradesh's 8.77%, 2031 bond was dealt at a weighted average yield of 6.7679%

* INR 13.00 million of Tamil Nadu's 7.75%, 2028 bond was dealt at a weighted average yield of 6.3336%

* INR 2.80 million of Tamil Nadu's 8.08%, 2029 bond was dealt at a weighted average yield of 6.4631%

* INR 7.00 million of Telangana's 7.96%, 2032 bond was dealt at a weighted average yield of 6.7199%

* INR 1.00 million of Rajasthan's 8.21%, 2026 bond was dealt at a weighted average yield of 6.3236%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	WEDNESDAY	TUESDAY
Three-year	6.68-6.73%	6.66-6.68%
Five-year	6.81-6.86%	6.79-6.82%
10-year	7.08-7.12%	7.05-7.08%

 

End

 

Edited by Saji George Titus and Rajeev Pai

 

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