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Informist, Thursday, Sept. 4, 2025

 

By Vaishali Tyagi

 

MUMBAI – Yields on corporate bonds ended 2-3 basis points lower across tenures Thursday as mutual funds bought aggressively due to uncertainty over Friday being a holiday for Id-e-Milad after the Maharashtra government rescheduled the holiday to Monday. Many investors had trimmed positions earlier in the day in view of the extended weekend. However, confirmation from the Reserve Bank of India about the money markets being open on Friday came only post market hours.

 

"People were confused...earlier most people in the market assumed Friday to be a holiday which led to some selling...but later some mutual fund buying came, which pushed the yields down as traders realised this is not a long weekend and they have one more day to trade," a fund manager at a mutual fund house said.

 

Yields on corporate bonds also fell tracking the fall in government bond yields and on fresh buying interest from some traders after spreads widened, dealers said. "Corporate bond market tracks the G-Sec market, and there was good movement (fall in yields) in g-sec market," a fund manager at another 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 also."

 

Government bond yields declined significantly after concerns about increased government borrowing through dated securities eased. The 10-year benchmark 6.33%, 2035 gilt closed at a yield of 6.4334%, against 6.5430% yield on Wednesday. The government estimates a net revenue loss of around INR 480 billion from the GST Council's decision late Wednesday to move to a two-slab rate structure. The estimated revenue loss was below market expectations of INR 600 billion to INR 1 trillion, dealers said.

 

In the secondary market, deals aggregating INR 95.73 billion were recorded on the National Stock Exchange and BSE combined Thursday, lower than INR 144.61 billion on Wednesday. Mutual funds, along with a handful of insurance companies, bought aggressively across tenures, dealers said. Banks were also actively buying shorter tenure bonds. Pension funds and corporate were absent from the market.

 

Trading in the corporate bond market was concentrated in the one- to three-year segment, with moderate buying interest seen in the four- to six-year segment. The 10-year corporate bonds saw the least trades.

 

Papers issued by REC, Vedika Credit Capital, Indian Railway Finance Corp., ICICI Home Finance Co., Akara Capital Advisors, Andhra Pradesh Mineral Development Corp., Muthoottu Mini Financiers, Cholamandalam Investment and Finance Co., Hinduja Leyland Finance, Sammaan Capital, Telangana State Industrial Infrastructure Corp., and National Bank for Agriculture and Rural Development were traded the most.

 

In the primary market, activity remained muted with issuances aggregating only around INR 2.80 billion as issuers are waiting more favourable conditions to raise funds through the corporate debt market, dealers said. On Friday, only Keertana Finserv Pvt. Ltd. will raise INR 800 million through April 2028 bonds. Dealers said activity in the corporate bond market has slowed down significantly due to rise in yields.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 58.80 million were traded at a weighted average yield of 6.5970-7.2531%, according to data from the RBI's Negotiated Dealing System-Order Matching System Thursday.

 

* INR 30.00 million of Uttar Pradesh's 8.49%, 2028 bond was dealt at a weighted average yield of 6.5970%

* INR 24.00 million of Haryana's 8.21%, 2026 bond was dealt at a weighted average yield of 7.2531%

* INR 3.00 million of Tamil Nadu's 7.75%, 2032 bond was dealt at a weighted average yield of 7.0410%

* INR 1.80 million of Tamil Nadu's 7.74%, 2032 bond was dealt at a weighted average yield of 7.0489%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

 

Tenure	THURSDAY	WEDNESDAY
Three-year	6.89-6.92%	6.92-6.94%
Five-year	7.00-7.03%	7.02-7.06%
10-year	7.16-7.20%	7.17-7.22%

 

End

 

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

 

Edited by Ashish Shirke

 

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