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Informist, Monday, Aug. 25, 2025

 

By Ketaki Patil

 

MUMBAI – Yields on corporate bonds in the secondary market ended higher on Monday due to selling pressure after the yield on the 10-year benchmark, 6.33%, 2035 government bond rose past the psychologically crucial 6.58% mark, dealers said. Lack of buying incentives and caution ahead of GDP data, scheduled to be released Friday, also weighed on sentiment, dealers said. 

 

"There is little buying interest from national banks also, so there is no support which the market is seeing. Everyone is running with low (positions), and plus now, GDP numbers are also there, towards the month-end. That is why it's happening," a dealer at an insurance firm said.

 

On Monday, the yield on the 10-year benchmark gilt settled at 6.60%, the highest closing level since Mar. 27, after Fitch Ratings affirmed India's sovereign rating at 'BBB-' with a stable outlook, disappointing traders who were expecting an upgrade in line with S&P Global Ratings earlier this month. Reserve Bank of India Governor Sanjay Malhotra's comments at an event in Mumbai on the country's economic growth also dampened traders' sentiment, dealers said. On Monday, Malhotra said the central bank had "not lost sight of the objective of growth" and would continue with its monetary policy to maintain price stability, with a focus on growth.

 

"The market is running on negative sentiment. So, at every negative news, yields are ready to go up...the market was expecting Fitch also will upgrade the rating. But it did not," a dealer at a non-banking financial institution said. "The market got affected from it and they started to sell it out. So, yield (on the 6.33%, 2035 gilt) today touched almost 6.60%." S&P Global Ratings had upgraded India's long-term unsolicited sovereign credit rating to 'BBB' from 'BBB-'.

 

Market participants noted that the selling pressure across tenures kept investors cautious during the day. "All the trades today were due to selling pressure. As soon as the market moves from here, everybody starts cutting their position," the dealer said. "Nobody wants to take more risk. Now look, there is no trade in 15-year papers...everybody was in expectation that at least 10-15 basis points should be rallied from here. Instead of rallying, it has gone down." 

 

In the secondary market, deals aggregating to INR 105.24 billion were recorded on the National Stock Exchange and BSE combined on Monday, lower than INR 106.94 billion Friday. Mutual funds were seen active on both selling and buying side, along with a handful of banks, dealers said. Pension funds were also seen active on both the buying and selling fronts and their trades were concentrated in longer tenures, but the overall participation remained largely subdued.

 

Papers issued by Kerala Infrastructure Investment Fund Board, Navi Finserv Ltd., Cholamandalam Investment And Finance Co. Ltd., Telangana State Industrial Infrastructure Corp. Ltd., Sammaan Capital Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., Telangana State Industrial Infrastructure Corp. Ltd., Adani Enterprises Ltd., and Keertana Finserv Pvt Ltd. were the most traded on exchanges on Monday.

 

In the primary market, several companies were lined up to raise funds aggregating to INR 3.19 billion through corporate bond issuances Monday. On Tuesday, issuances in the primary market will be significantly higher at INR 52.27 billion on account of big-ticket borrowings by several companies, which include Housing & Urban Development Corporation Ltd. and India Infradebt Ltd. 

 

Traders await Housing and Urban Development Corp.'s INR 30-billion bond issuance scheduled for Tuesday, as the coupon on the bond is expected to provide direction to yields on other non-convertible debentures. "Definitely, it (HUDCO) will invite more troubles for the NCDs. Because I think from here we are seeing that on the technical chart it may touch 6.64% and if it sustains, then the yields on NCDs also will also move up by around 5 to 10 bps," the dealer said.

 

In the coming days, dealers expect primary market issuances to remain subdued as major public sector banks are not seen tapping the market. "Rates are quite high at this juncture, so most of the PSUs are not coming to the market now," the dealer said.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 10 million were traded at a weighted average yield of 6.3730-6.8530%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 5.00 million of Uttar Pradesh's 8.38%, 2027 bond was dealt at a weighted average yield of 6.3730%

* INR 5.00 million of Tamil Nadu's 7.74%, 2031 bond was dealt at a weighted average yield of 6.8530%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

Tenure	THURSDAY	WEDNESDAY
Three-year	6.83-6.86%	6.83-6.85%
Five-year	6.94-6.97%	6.94-6.96%
10-year	7.11-7.13%	7.12-7.14%

 

End

 

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

 

Edited by Avishek Dutta

 

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