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Informist, Monday, Sept. 29, 2025

By Janwee Prajapati

MUMBAI – Yields on corporate bonds in the secondary market ended steady across tenures Monday as traders remained cautious ahead of the Reserve Bank of India's Monetary Policy Committee meeting outcome Wednesday, dealers said. Market participants remained divided on the outcome of the MPC meeting, with some anticipating a 25-basis-point rate cut while others expect no change in rates. However, traders will remain watchful of the tone and commentary of the rate-setting panel and expect RBI Governor Sanjay Malhotra to signal scope for a rate cut at the panel's meeting in December, they said.

Further, dealers said some traders were focused on issuances in the primary market, which also contributed to steady secondary market levels. "Even though volume was there in the secondary market, traders were not putting in large bets ahead of policy outcome, which contributed to flat secondary market yields, and they were also busy trading papers in the primary market, deploying their funds in fresh issuances," a fund manager at a mutual fund house said. The primary market has gained traction, with key issuers raising significant amount, keeping traders busy with fresh bond issuances. Going forward, secondary market activity is anticipated to remain choppy on the back of uncertainties around the policy rate decision. 

In the secondary market, deals aggregating INR 154.24 billion were recorded on the National Stock Exchange and BSE combined on Monday, higher than INR 119.15 billion on Friday. Mostly mutual funds were active in shorter tenure papers, while activity in five-year and above remained dull, dealers said. Mutual funds bought and sold papers up to three-year segment, while some private sector banks also bought a few papers in the 2026 segment. Corporates and other participants, including insurance companies and pension funds, were largely absent from the market.

Papers issued by Power Finance Corp. Ltd., National Bank For Agriculture And Rural Development, LIC Housing Finance Ltd., Small Industries Development Bank of India, Bajaj Finance Ltd., REC Ltd., HDFC Bank, Tata Capital Financial Services Ltd., Telangana State Industrial Infrastructure Corp. Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., and Muthoottu Mini Financiers Ltd., were traded the most Monday.

Activity in the primary market remained robust on Monday. Bond issuances aggregating INR 125.15 billion were lined up. LIC Housing Finance raised INR 11 billion through the reissuance of bonds maturing on Aug. 11, 2028, at a 6.90% yield. A few other non-banking financial companies were also able to raise funds. On Tuesday, bond issuances aggregating INR 17.93 billion are scheduled. Convenient Hospitals Ltd. has invited bids to raise INR 12.25 billion through the issuance of bonds maturing on Sept.30, 2030. 

Merchant bankers said that issuers are reluctant to tap the debt market for funds and expect a temporary lull in primary market activity until the RBI's policy outcome is clear. Some key issuers in primary expect a policy easing announcement in the upcoming policy meeting, which might lower the cost of borrowing in the near future, dealers said. "Market activity will likely pause until the policy outcome is clear, with most market participants waiting for the governor's commentary to set the tone for the market, which will affect the bond issuances," the fund manager quoted above said. "Once things are clear, issuances will pick up and we may see some more PSUs (public sector undertakings) tapping the market."

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 16.00 million were traded at a weighted average yield of 6.8812-7.0948%, according to data from the RBI's Negotiated Dealing System-Order Matching System on Monday.

* INR 11.50 million of Rajasthan's 8.19%, 2026 bond was dealt at a weighted average yield of 6.8812%

* INR 4.50 million of Tamil Nadu's 7.74%, 2032 bond was dealt at a weighted average yield of 7.0948%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Akul Nishant Akhoury

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