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Informist, Friday, Aug. 22, 2025

By Ketaki Patil and Vaishali Tyagi

MUMBAI – Yields in the secondary market of corporate bonds moved in a narrow range across tenures on Friday, before ending steady compared to Thursday as investors were primarily engaged in requirement-based trades, dealers said. Dearth of fresh cues further led to limited movement in yields during the day, they added. 

"Balance between demand and supply in the corporate bond market kept yields stable, with no big movement (in yields). But when gilt yields moved slightly higher, some selling pressure was seen in corporate bonds. But ultimately, yields returned to their yesterday's (Thursday) levels," a dealer at a brokerage firm said. "Market was flat today (Friday), with mutual funds selling papers that was mostly met by insurance companies buying, offsetting the selling pressure and maintaining stability."

Corporate bond yields in the secondary market saw some fluctuation, rising 1-2 basis points in the three-year and five-year tenures earlier in the day, tracking an upward trend in government bond yields. The rise in gilt yields was driven by fresh short bets placed by traders after the auction, coupled with poor appetite for gilts and caution ahead of US Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The benchmark 10-year government security, 6.33% 2035 bond closed at 6.55% yield on Friday, up from 6.53% the previous day.

"Market participants are currently seeking fresh cues or some key data points, to guide their investment decisions," a dealer at a mid-sized brokerage firm said. "The primary market will gain more some momentum, if large issuers will tap the primary market and that effect will be eventually seen in the secondary market of corporate bond."

In the secondary market, deals aggregating to INR 106.94 billion were recorded on the National Stock Exchange and BSE combined on Friday, significantly higher than INR 88.57 billion Thursday. Mutual funds were seen active on the selling side, along with a handful of banks, dealers said. Insurance companies actively bought papers. Pension funds were seen trading (both buying and selling) in longer tenures in low volume. Corporate enities were absent from the market on Friday.

Papers issued by Kerala Infrastructure Investment Fund Board, Navi Finserv Ltd., Cholamandalam Investment And Fin. Co. Ltd., Telangana State Industrial Infrastructure Corp. Ltd., Sammaan Capital Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., Akara Capital Advisors Pvt Ltd., Telangana State Industrial Infrastructure Corp. Ltd., Muthoot Fincorp Ltd. and Keertana Finserv Pvt Ltd. were the most traded on exchanges on Friday.

A fund manager at a mid-sized fund house said both secondary and primary market actvity may pick up once yields in the government bond market stabilise. The bearish sentiment in the secondary market spilled over to the primary market. On Friday, Bajaj Finance Ltd. withdrew its planned INR 50-billion bond issue after receiving higher-than-expected coupon bids for its Aug. 24, 2035 bonds. "I think, they (Bajaj Finance) were expecting better levels (as in lower levels), and long-term corporate bonds are not getting that aggressive biddings, this is the reason that issuer went on backfoot," a fund manager at a mid-sized fund house said. 

In the primary market, several companies were to raise funds aggregating to INR 55.50 billion through corporate bond issuances on Friday. On Monday, bond issuances in the primary market will be in significantly low volume. Only two bond issuers will tap the corporate bond market for fund raising. Patel Engineering Ltd. plans to raise INR 1 billion and Dvara Kshetriya Gramin Financial Services Pvt. Ltd. will tap the market to raise INR 687 million through their respective bond issuances.

BENCHMARK LEVELS FOR CORPORATE BONDS: 

End

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

Edited by Avishek Dutta

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