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Informist, Friday, Oct. 24, 2025

By Vaishali Tyagi

MUMBAI – Yields on corporate bonds in the secondary market ended marginally higher Friday as mutual funds faced redemption pressure and sold bonds in the secondary market, dealers said. State-owned banks and insurance companies also sold paper across various tenures, which further added to the rise in yields, they said.

The yield on the 10-year benchmark bond issued by the National Bank for Agriculture and Rural Development rose by 2-3 basis points. Similarly, yields on three-year and five-year bonds increased by 1-2 bps. Dealers attributed this movement to sustained selling from mutual funds.

"Mutual funds were seen highly active on selling side due to redemption pressure...threrefore yields have risen," a fund manager at a mid-size mutual fund house said. "There was not much movement in yields this week but some portfolio churning have happened across tenure, which limited the fall in yields because some traders bought papers to reshuffle their portfolio before month-end." 

Some insurance companies were also active sellers, adding to the market strain and pushing yields higher. However, the rise in yields was partially capped by buying activity from certain private banks and mutual funds, dealers said.

In the secondary market Friday, deals aggregating INR 65.01 billion were reported on the National Stock Exchange and BSE combined, higher than INR 52.20 billion Thursday. "I will say, volume is still down even though it has picked up compared to yesterday (Thursday) but if we compare it with last week or initial weeks of the month, overall this quantum (volume) is still on the lower side as most of the traders have not returned to the market after Diwali holidays, we expect volume to rise from Monday onwards," the dealer quoted above said. 

Mutual Funds and state-owned banks were active in selling paper across tenures. Insurance companies and some state-owned banks were said to be selling in longer segment. A handful of mutual funds and private banks were active on buying sides, especially in shorter-tenure bonds, as per the dealers. Pension funds were largely absent from the corporate debt market, dealers said.  

Papers issued by Vivriti Capital, Housing And Urban Development Corp., Indian Railway Finance Corp., Krazybee Services Pvt., Akara Capital Advisors, Keertana Finserv Pvt., The Andhra Pradesh Mineral Development Corp., Sammaan Capital, and National Bank For Agriculture And Rural Development were traded the most on exchanges Friday.

On Friday, primary market remained subdued with deals aggregating to over INR 10.15 billion. On Monday, two bond issuances are in line to raise funds amounting to INR 15.25 billion. Shriram Finance has invited bids to raise up to INR 15 billion through reissuing bonds maturing on Apr. 9, 2028. Bhavnagar Municipal Corporation plans to raise INR 250 million by issuing municipal bonds maturing on Oct. 28, 2030. 

Dealers and market participants expect issuances to pick up from Monday as traders and investors will return from Diwali holidays. Some dealers anticipate public sector undertakings to tap the market. "Primary market activity should pick up as some state-owned banks and companies have got board approvals to issue bonds and ratings from rating agencies."

UDAY BONDS

In the secondary market, no Ujwal DISCOM Assurance Yojana bonds were traded at a weighted average yield, according to data on the RBI's Negotiated Dealing System-Order Matching System Friday.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Deepshikha Bhardwaj

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