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Informist, Thursday, Oct. 16, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds in the secondary market remained flat on Thursday as market participants shifted their focus on two major bond issuances scheduled for Friday, dealers said. Secondary market was relatively dull, with some mutual funds and banks selling bonds to raise cash for investments in the primary market, they said.

"Selling in the secondary market was primarily driven by preparations for Friday's bidding, with investors looking to reserve cash for potential investments in large issuances," a fund manager at a mutual fund house said. Market participants said that the primary market is gaining momentum, with several key issuers raising substantial amount and more expected in the coming days. "Several non-banking financial companies are lined up with a mix of short- and long-term bonds," the fund manager quoted above said. 

State Bank of India, the largest state-owned lender, will tap bond market to raise up to INR 75 billion through issuance of 10-year bonds maturing on Oct. 20, 2035. The coupon on the bond, which will be paid annually, is yet to be decided. This is the bank's first bond issuance in 2025-26 (Apr-Mar). "We expect more banks to follow suit once SBI raises funds on Friday... market will assess the coupon rate and response to SBI's issue, which will likely set the course for future deals. a dealer at a brokerage firm said. "I expect SBI's bank's coupon to come at 7.20%-7.25%, I think good response will come from insurance companies and pension funds."

Another significant issuance is from the National Bank for Agriculture and Rural Development, which plans to raise up to INR 70 billion through the reissuance of bonds maturing on Jan. 19, 2029. "NABARD's paper is highly anticipated, with investors reshuffling their portfolios to invest, adding that some banks reshuffled their portfolio to make room for NABARD bonds by adjusting their portfolio," the dealer quoted above said.

In the secondary market, deals aggregating to INR 137.62 billion were reported on the National Stock Exchange and BSE combined Thursday, slightly higher than INR 123.84 billion on Wednesday. Mutual funds were seen as active on the selling side, along with a handful of banks, dealers said. Insurance companies, pension funds and corporate entities sold and bought in longer tenure bonds on Thursday. 

Papers issued by Kerala Infrastructure Investment Fund Board, Small Industries Development Bank of India, Muthoot Fincorp., IIFL Finance, Export Import Bank of India, Adani Enterprises, IIFL Samasta Finance, MAS Financial Services, and Navi Finserv were traded the most on bourses Thursday.

Merchant bankers said that primary market issuances will impact secondary market yields as investors, including mutual funds, banks, insurance companies, and pension funds, eagerly await these top-rated papers. To invest in these issues, investors actively reshuffle their portfolios. When some investors are unable to invest in the primary market, they aggressively trade in the secondary market, which leads to movement in secondary market bond yields.

On Thursday, activity in the primary market remained moderate with bond issuances aggregating to INR 16.70 billion. "Primary market activity will pick up only, with many issuers awaiting large bond issuances from banks and state-owned companies to gauge investor response. Currently, some private companies are tapping the market with relatively small issuances. But, it is expected that some PSUs will enter the market after festive week," a dealer at another brokerage firm said. Dealers expect a surge in corporate bond activity in the second half of the year.

UDAY BONDS

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In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating to INR 2.00 million were traded at a weighted average yield of 6.6028-6.9652%, according to data on the RBI's Negotiated Dealing System-Order Matching System Thursday.

* INR 1.00 million of Rajasthan's 8.21%, 2026 bond was dealt at a weighted average yield of 6.6028%

* INR 1.00 million of Uttar Pradesh's 8.70%, 2031 bond was dealt at a weighted average yield of 6.9652%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Akul Nishant Akhoury

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