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Informist, Monday, Oct. 6, 2025

 

By Ketaki Patil

 

MUMBAI – Yields on corporate bonds ended lower Monday as traders continued to buy high-yielding bonds across tenures following Reserve Bank of India Governor Sanjay Malhotra's comment Wednesday that policy space has opened up for further easing, dealers said. Mutual funds and pension funds were seen buying high-yielding papers as they expect a rate cut at the next Monetary Policy Committee meeting in December.

 

Dealers also said that the lower-than-expected supply of state bonds for the current quarter also pushed corporate bond yields lower as traders rushed to buy bonds to fulfil their portfolio requirements. Five states are set to borrow INR 94.10 billion Tuesday. The borrowing calendar released Friday after market hours showed that states plan to issue INR 2.8 trillion of bonds in the current quarter, lower than the INR 3.5 trillion the market expected. 

 

"The calendar for SDL (state development loans) borrowings this quarter was quite lower than what the market had expected, and RBI's (RBI Governor Malhotra) tone during the policy was also reassuring (on rate cut in December policy)... with inflation seen moderating and growth expected to stay strong," a fund manager at a mutual fund house said. "That gave traders a sense of comfort on the rate outlook. Therefore, we have seen a rally across segments."

 

In the secondary market, deals aggregating to INR 87.35 billion were recorded on the National Stock Exchange and BSE combined on Monday, marginally lower than INR 88.27 billion on Friday. Mutual funds were active on both buying and selling sides in shorter tenures. Pension Funds were active on the buying side, while banks sold papers. Activity in longer tenure continues to be lower. Corporates were mostly absent from the debt market. 

Papers issued by Kerala Infrastructure Investment Fund Board, Navi Finserv, Telangana State Industrial Infrastructure Corp., Power Finance Corp., The Andhra Pradesh Mineral Development Corp., and Vivriti Capital were traded the most Monday. 

 

On Monday, bond issuances aggregating to INR 6.75 billion were lined up, but the deals were not confirmed till the time of reporting. Tuesday, issuances aggregating to INR 2.22 billion are scheduled. Only two issuers, Rare Asset Reconstruction and HDB Financial Services, have invited bids to raise funds through the corporate debt market. 

 

Merchant bankers expect that corporate bond issuances in the primary market to pick up in the near future. "Of course, it will pick up in the second half of the year (Oct-Mar) and the market is expecting debt issuances to rise in October itself as retail lending by NBFCs (non-banking financial companies) will rise, and they will eventually need funds to lend," a fund manager at a mutual fund house said.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating INR 79.30 million were traded at a weighted average yield of 6.4927-7.1221%, according to data from the RBI's Negotiated Dealing System-Order Matching System on Monday.

 

* INR 44.00 million of Uttar Pradesh's 8.75%, 2030 bond was dealt at a weighted average yield of 6.7456%

* INR 30.00 million of Uttar Pradesh's 8.49%, 2028 bond was dealt at a weighted average yield of 6.5662%

* INR 2.50 million of Tamil Nadu's 7.75%, 2028 bond was dealt at a weighted average yield of 6.4927%

* INR 1.80 million of Tamil Nadu's 7.74%, 2032 bond was dealt at a weighted average yield of 7.1221%

* INR 1.00 million of Tamil Nadu's 7.78%, 2031 bond was dealt at a weighted average yield of 7.0160%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

Tenure	MONDAY	FRIDAY
Three-year	6.73-6.74%	6.72-6.78%
Five-year	6.89-6.94%	6.94-6.96%
10-year	7.17-7.18%	7.18-7.21%

 

End

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

 

With inputs from Vaishali Tyagi

Edited by Saji George Titus

 

 

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