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Informist, Monday, Dec. 22, 2025

By J. Navya Sruthi

MUMBAI – Yields on corporate bonds rose by three to four basis points in the secondary market Monday tracking the government bonds, market participants said. Continued selling and low liquidity in the banking system also supported yields, they said. 

"Tracking g-sec (government securities) was the major reason, (also) low volume (in the market) and lack of buying is also an issue," a dealer at a state-owned bank said. Usually during every quarter-end, yields on corporate bonds rise as mutual funds sell bonds amid redemption pressure to meet advance tax payments and monthly goods and services tax payments, dealers said. 

Meanwhile, yields on the 10-year benchmark, 6.48%, 2035 gilt rose to 6.6643%, the highest level since Mar. 18 due to lack of an announcement about another open-market operations auction. Further, a rise in US yields and fall in the rupee also supported yields.    

Dealers expect yields to remain on the higher-end throughout month-end, due to weak demand and redemption pressure from mutual funds amid low liquidity in the banking system. "Rates will be on higher side till month-end. Liquidity will improve only in January, when government's month-end inflows start, then", a dealer at a private bank said.

The overall negative sentiment in the market was also driven by minutes of the Reserve Bank of India's December Monetary Policy Committee meeting, released Friday, as the market takes the December rate cut as a termination rate cut for this cycle. The minutes suggested there was enough room to cut rates if growth momentum sinks but didn't show a preference for an immediate rate cut after 125 basis points of repo rate reductions in 2025, according to market participants. Following the minutes, the market does not expect a repo rate cut in February. 

Deals aggregating to INR 91.93 billion were recorded on the National Stock Exchange and BSE combined, significantly down from INR 135.73 billion Friday. Banks and mutual funds were on the selling side Monday, the dealer said. 

Paper issued by National Bank For Agriculture And Rural Development, UGRO Capital, Muthoot Capital Services, Andhra Pradesh State Beverages, Vivriti Capital, Akara Capital Advisors, Bajaj Housing Finance, Earlysalary Services, Shri Ram Finance Corp., Muthoot Microfin, Krazybee Services, The Andhra Pradesh Mineral Development Corp., Adani Enterprises, and Muthoottu Mini Financiers were traded the most on the bourses. 

In the primary market, companies issued bonds worth over INR 11.25 billion, higher than INR 9.20 billion Friday. According to dealers, Phoenix ARC Pvt. Ltd. raised INR 2.10 billion through four different bonds, against INR 3 billion, the combined issue size of four bonds.

On Tuesday, issuances totalling INR 186.72 billion are scheduled, including INR 100 billion by Bank of India and INR 60 billion by Power Finance Corp. The market expects a coupon over 7.25% on Bank of India's bonds, given the large size of the issue. Cholamandalam Investment And Finance Co. will raise up to INR 15 billion by reissuing Feb. 17, 2028 bonds and Poonawalla Fincorp Ltd. will raise up to INR 7.5 billion through Mar. 20, 2028 bonds on Tuesday.

UDAY BONDS

In the secondary market, three Ujwal DISCOM Assurance Yojana bond of INR 208.90.00 million was traded Monday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 200.00 million of Tamil Nadu's 7.74%, 2028 bond was dealt at a weighted average yield of 6.4956%

* INR 7.80 million of Andhra Pradesh's 7.35%, 2030 bond was dealt at a weighted average yield of 7.4514%

* INR 1.10 million of Tamil Nadu's 7.75%, 2032 bond was dealt at a weighted average yield of 7.4514%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

Edited by Deepshikha Bhardwaj

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