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Informist, Thursday, Sept. 25, 2025

By Ketaki Patil

MUMBAI – Yields on corporate bonds in the secondary market closed steady Thursday as mutual fund bond sales, driven by quarter-end redemption pressure, were offset by demand from banks and other mutual funds, dealers said. While some funds utilised their cash to make purchases, others were required to sell bonds to meet redemption requirement, which kept yields unchanged from previous close, they said.

"In the 2-3 year segment, mutual funds facing cash shortages were sellers while those with liquidity reserves stepped in as buyers," a dealer with a brokerage firm said. "Also, some mutual funds with liquidity constraints had to offload bonds to meet their needs and high volumes today (Thursday), made the day hectic in the secondary market."

Dealers said redemption pressure is likely to push yields higher in near term. "The selling is more due to redemption pressure and it will likely put pressure on yields (to push yields higher) for a brief period in coming days," the dealers quoted above said.

In the primary market, issuers are awaiting clarity from the Reserve Bank of India's upcoming Monetary Policy Committee meeting next week. Market participants are divided on the chances of a rate cut. Too many issuances by big state-owned entities and non-banking financial companies after policy outcome could push coupon levels higher, dealers said. 

On Thursday, bond issuances aggregating INR 40.28 billion were lined up. Solar Energy Corp. of India's 10-year bond was fully subscribed at a 7.14% coupon. Market participants said the pricing was in line with expectations. "It's a PSU (public sector banks) that tapped (the market) for the first time, naturally, it had high demand as a new issuer," the dealer quoted above said. "The coupon was neither good nor bad...it was fair compared to peers (other state-owned entities) that recently tapped."

On Friday, bond issuances aggregating INR 27.10 billion are scheduled. Bajaj Finance Ltd. will tap the market to raise up to INR 20.00 billion through a sept. 27, 2030 bond. Keystone Realtors Ltd. plans to raise INR 3.35 billion and Sammaan Capital Ltd. will raise INR 1.75 billion. Greaves Finance Ltd., Kogta Financial (India) Ltd., Satin Finserv Ltd., and Manba Finance Ltd. plan to raise funds.

In the secondary market Thursday, deals aggregating INR 158.88 billion were recorded on the National Stock Exchange and BSE combined, significantly higher than INR 110.49 billion Wednesday. Mutual funds, along with handful of insurance and pension funds, were active on both buying and selling sides, across tenures. Banks were active on the buying side. 

Papers issued by Kerala Infrastructure Investment Fund Board, Navi Finserv Ltd., National Bank For Agriculture And Rural Development, Telangana State Industrial Infrastructure Corp. Ltd., Sammaan Capital Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., and Vivriti Capital Ltd. were traded the most Thursday.

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 54.00 million were traded at a weighted average yield of 6.9477-7.7807%, according to data from the RBI's Negotiated Dealing System-Order Matching System Thursday.

* INR 44.00 million of Uttar Pradesh's 8.75%, 2030 bond was dealt at a weighted average yield of 6.9477%

* INR 10.00 million of Rajasthan's 8.19%, 2026 bond was dealt at a weighted average yield of 7.7807%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Subhojit Sarkar

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