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Informist, Thursday, Aug. 28, 2025

 

By Ketaki Patil

 

MUMBAI – Yields on corporate bonds in the secondary market ended 2-3 basis points lower Thursday, tracking the rally in government securities and on the back of fresh buying interest from traders, dealers said. "Corporate bond market tracks the G-Sec market, and there was good movement there (G-sec market)," a fund manager at a mid-sized mutual fund house said. "People play on spreads, and as yield spreads widened, people showed interest in buying, and that excessive buying pushed the yields down by 2-3 basis points in corporate bond yields."

 

Government bond yields slumped on hope of support from the Reserve Bank of India, dealers said. Some traders speculated that the RBI was likely buying gilts in the secondary market to support prices before the INR-320-billion gilt auction Friday. Others said that the RBI might announce support through an open market purchase or another buyback of gilts, they said. The 10-year benchmark 6.33%, 2035 gilt closed at a yield of 6.5328%, against 6.5997% yield on Tuesday. Markets were closed on Wednesday on account of Ganesh Chaturthi.

 

Traders said the movement in gilts provided a positive spillover effect for corporate bonds. "In the last half an hour on Tuesday, we had already seen some sharp buying that reversed the day's losses, and that positive sentiment carried forward today (Thursday)," said the fund manager quoted earlier. "So, while gilts saw a 5-6 bps rally (downward), corporates too moved with yields falling by 2-3 bps."

 

In the secondary market, deals aggregating to INR 130.74 billion were recorded on the National Stock Exchange and BSE combined Thursday, higher than INR 91.86 billion on Tuesday. Mutual funds were seen active on both selling and buying sides, though their trades were concentrated in short-term papers maturing in two and three years, dealers said. Banks were active across segments, while insurance companies were active in the longer tenure. Pension funds and corporate entities were largely absent from the market. 

 

Market activity was slightly down as many participants were away for Ganesh Chaturthi holidays. "It's difficult to give any opinion (direction on further movement) right now," a dealer at a mid-sized broking firm said. "Maybe on Monday, we will get a clearer picture."

 

Papers issued by Kerala Infrastructure Investment Fund Board, Muthoot Fincorp. Ltd., Navi Finserv Ltd., National Bank For Agriculture And Rural Development, Telangana State Industrial Infrastructure Corp. Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., were the most traded papers on exchanges on Thursday.

 

In the primary market, several companies were to raise funds aggregating to INR 12.60 billion through corporate bond issuances on Thursday. On Friday, bond issuances in the primary market will be of a higher volume, aggregating to INR 35.0 billion. Tata Power Renewable Energy Ltd. plans to raise INR 15 billion and Delhi International Airport Ltd. plans to raise INR 10 billion through their respective bond issuances. HDB Financial Services Ltd. and Aditya Birla Capital Ltd. plan to tap the market to raise INR 5 billion each through their respective bond issuances.

 

Going forward, dealers expect primary market issuances to remain subdued as major public sector entities are not seen tapping the market with bond yields being on the higher side. 

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 19.50 million were traded at a weighted average yield of 6.6987-7.3025%, according to data from the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 10.00 million of Rajasthan's 8.21%, 2026 bond was dealt at a weighted average yield of 6.6987%

* INR 9.50 million of Tamil Nadu's 8.04%, 2029 bond was dealt at a weighted average yield of 7.3025%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

 

Tenure	THURSDAY	TUESDAY
Three-year	6.87-6.89%	6.89-6.92%
Five-year	6.98-7.01%	6.99-7.02%
10-year	7.14-7.17%	7.16-7.20%

 

End

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

 

Edited by Avishek Dutta

 

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