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Informist, Friday, Nov. 28, 2025

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds in the secondary market rose 2-3 basis points on Friday as traders unwound their positions and sold bonds after the stronger-than-expected Jul-Sept GDP data, which dampened rate cut hopes, dealers said. Earlier in the day, yields moved in a narrow range with traders focused on need-based trading and until the GDP data release, traders were pricing in a 25-basis-point cut in the repo rate on Dec. 5, they said.

India's economy grew more than expected once again with GDP growth hitting a six-quarter high of 8.2% in Jul-Sept, data released by the statistics ministry Friday showed. The Indian economy had grown higher than expected in the June quarter as well at 7.8%. GDP growth was 5.6% in the year-ago quarter. Growth in the September quarter was one percentage point higher than the 7.2% projected by economists in an Informist poll. GDP growth in the quarter was 120 basis points higher than the Reserve Bank of India's forecast of 7.0%.

Dealers said the slight 2-3 bps rise in corporate bond yields was due to traders unwinding positions taken earlier, as robust GDP data dampened rate cut expectations, offsetting earlier gains. "Today's rise in yields was not significant as traders had bought bonds earlier this week which pushed yields 2-3 bps higher due to rate cut hopes, and now yields (corporate bond) are back to the same level because these are same bets which are unwounded now," a dealer at a brokerage firm said. A few traders bought bonds on expectation of a rate cut after commentary from the Reserve Bank of India Governor Sanjay Malhotra Monday.

He said India's recent macroeconomic indicators suggested that there was potential for more rate cuts. The Monetary Policy Committee had clearly stated in the October policy statement that there was potential to cut rates further, the RBI governor said in an interview with the ZEE Business news channel. The central bank will hold its bi-monthly policy meeting on Dec. 3-5.

Merchant bankers added that corporate bond yields tracked government bond yields, which rose 4-5 bps after the GDP data release. Government bond yields jumped on the back of India's strong GDP growth numbers. The 10-year benchmark 6.48%, 2035 gilt closed at 6.51% yield, against 6.46% yield, Thursday. The most traded 6.33%, 2035 gilt ended at 6.55% yield, against 6.51% yield in the previous session. The 6.33%, 2035 bond yield rose the most in a day since Sept. 18. The five-year benchmark 6.01%, 2030 bond yield rose over 6 bps Friday, the most in a day since Aug. 18.

Fund managers said that the rise in corporate bond yields was capped as the GDP data was released towards the market closing hours. However, they expect some upward movement in corporate bond yields to continue on Monday. "The impact was muted as the GDP data came in late, but with rate cut hopes fading, market positioning is shifting," a fund manager at a mutual fund house said. "Yields might edge up on Monday."

In the secondary market, dealers said mutual funds were actively buying and selling in the market across tenures. Banks were seen selling along with a handful of insurance companies in the secondary market. Dealers said the primary market is seeing a surge in short-term bond issuances, focusing on bonds with maturities up to five years. Overall deals aggregating to INR 77.55 billion were recorded Friday on the National Stock Exchange and BSE combined, marginally lower than INR 79.19 billion seen Thursday. 

Meanwhile, in the primary market, issuances aggregating to INR 121.10 billion were scheduled for Friday, against INR 138.55 billion Thursday. State-owned lender Canara Bank raised INR 35 billion at a coupon of 7.55% through the issuance of Basel-III-compliant additional tier-I bonds. The issuance was fully subscribed. Monday, Hedge Finance Ltd. and STL Networks Ltd. had invited bids to raise funds. Bharti Telecom also tapped the market to raise funds via two bonds Friday. However, the amount was not confirmed till the time of writing this report. 

Papers issued by Sammaan Capital, Hinduja Leyland Finance, Power Finance Corp., LIC Housing Finance, Muthoottu Mini Financiers, The Andhra Pradesh Mineral Development Corp., Keertana Finserv, Vivriti Capital, and National Bank for Agriculture and Rural Development were traded the most on the exchanges Friday.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

Edited by Deepshikha Bhardwaj

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