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Informist, Monday, Dec. 8, 2025

By J. Navya Sruthi

MUMBAI – Yields on three-year corporate bonds ended higher from the previous day on demand-supply imbalance and after comments from Reserve Bank of India Governor Sanjay Malhotra Friday, dealers said. Yields also rose tracking gilts, they said. Yields are likely to remain upward in the short-term on firm supply.   

"Yields were higher today (Monday) because of RBI governor's comments on liquidity," a fund manager at a mutual fund house said. "Currently positive news is limited, so we can expect this (higher yields) to continue."    

Malhotra Friday said the main purpose of conducting the open market purchases is liquidity management and not influencing yields on government bonds. The governor said the RBI would conduct open market bond purchases of INR 1.00 trillion in December to inject durable liquidity into the banking system. 

Increasing bond issuances in the primary market, which is leading to demand-supply imbalance, is also weighing on yields on corporate bonds. "Not just here (in the corporate bond market), there is more supply of SDL (state government bonds) too," the fund manager said. "This (rise in yields) will continue till we have positive news as in more OMOs."

Dealers said yields on the three-year National Bank for Agriculture and Rural Development's bond rose to 6.80% during the day, as against 6.74% at Monday's open. A fall in government bond yields also weighed on corporate bond yields, market participants said.  

The 6.48%, 2035 gilt yield closed at 6.53%, against 6.49% Friday, tracking a rise in overnight indexed swap rates. Offshore traders likely opted to pay fixed rates in swaps and sold gilts, with private-sector banks also likely selling gilts they had picked up on Friday. The five-year OIS rate ended at 5.91%, up 11 basis points from Friday's close and the highest closing level since Mar. 27. 

Multiple issuances in the primary market are scheduled for this week after the RBI's 25-bps rate cut Friday. Dealers said primary market activity may now pick up on the back of cheaper borrowing costs after the rate cut, with investors taking advantage of ample liquidity. 

Issuances aggregating to INR 6.65 billion were scheduled Monday, down from INR 10.46 billion Friday. Fundraising aggregating to INR 132.35 billion are scheduled for Tuesday. Power Finance Corp. will raise up to INR 35 billion through bonds maturing on Dec. 11, 2040. Small Industries Development Bank of India will raise up to INR 80 billion through a bond maturing Apr. 11, 2029. 

During this week, Bank of India will Wednesday raise up to INR 25 billion through Basel-III compliant additional tier-II bonds maturing in 10 years and Indian Railway Finance Corp. Ltd. will raise up to INR 50 billion through 10-year zero-coupon bonds. Other major issuers such as Housing and Urban Development Corp. and NABARD are also planning to raise funds in the primary market. Dealers expect the coupon on Bank of India's Basel-III compliant additional tier-II bonds to be set in the range of 7.20-7.25%. 

On Monday, more volume was seen in two-to-five-year tenors, a dealer at a brokerage firm said. Mutual funds were on buying and selling sides, while a few banks were selling in the secondary market, the dealer said.  

Deals aggregating to INR 96.40 billion were recorded on the National Stock Exchange and BSE combined Monday, down from INR 128.04 billion Friday. Paper issued by Indel Money, HDB Financial Services, Kerala Infrastructure Investment Fund Board, UGRO Capital, Small Industries Development Bank of India, Muthoot Fincorp, Krazybee Services, Navi Finserv, NABARD, Telangana State Industrial Infrastructure Corp., and Power Finance Corp. were traded the most on exchanges Monday.

UDAY BONDS

There were no Ujwal DISCOM Assurance Yojana bonds traded on the secondary market Monday according to data on the RBI's Negotiated Dealing System-Order Matching system.

BENCHMARK LEVELS FOR CORPORATE BONDS

End

With inputs from Aaryan Khanna

Edited by Tanima Banerjee and Deepshikha Bhardwaj

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