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Informist, Tuesday, Jan. 6, 2026

By J. Navya Sruthi

MUMBAI – Yields on corporate bonds rose for the second day in a row by three to four basis points as mutual funds continued to sell, dealers said. They do not see further spike in yields from the current levels due to the Reserve Bank of India's liquidity measures through open market operations auction and dollar-rupee buy-sell swap.   

"Mutual funds were selling due to tight liquidity in system. While liquidity (surplus) improved (Monday), there is still strain on rates as current liquidity is not at a comfortable level," a dealer at a state-owned company said. "They (mutual funds) are facing redemptions pressure from corporates so there is pressure," the dealer said. 

A fund manager at a domestic mutual fund house said that the "sentiment has gone southwards" because of persisting liquidity tightness, which led to selling in medium to longer-end corporate bonds. The fund manager also said that yields in corporate bonds took cues from gilts. "G-Sec yields were higher yesterday (Monday) and corporate bonds might have taken cues from that too." 

Government bond yields edged higher Monday due to larger-than-expected state borrowing at INR 5 trillion for Jan-Mar. However, yields on gilts were reversed Tuesday, taking cues from the state bond auction. The 10-year benchmark 6.48%, 2035 gilt yield ended at 6.61%, down from 6.63% Monday.     

Meanwhile, volume in the secondary market was INR 636.72 billion at 1500 IST, higher than INR 329.01 billion at the same Monday on the National Stock Exchange and BSE combined. Bonds issued by Bajaj Finance, IIFL Finance, Kotak Mahindra Investments, UGRO Capital, Vivriti Capital, Earlysalary Services, Krazybee Services, Navi Finserv, Satin Finserv, IIFL Smasta Finance, Keertana Finserv, Muthoottu Mini Financiers, Sammaan Capital, Adani Enterprises, and State Bank of India were traded the most on exchanges.

However, dealers and fund managers expect yields to fall in the coming days as liquidity is seen increasing in the market. The central bank has infused INR 500 billion durable liquidity into banking system Tuesday via OMO, conducted on Monday. The central bank will infuse INR 1 trillion through two other OMO auctions that are due this month, along with a $10 billion dollar-rupee buy-sell swap due on Jan. 13. These measures by the central bank will support the systemic liquidity. 

Lacklustre activity continued in the primary market Tuesday. Issuances totalling INR 3.20 billion were scheduled for Tuesday, higher than INR 3.05 billion on Monday. Adani Enterprises Ltd. raised INR 10 billion through public issuance of secured, rated, listed redeemable, non-convertible debentures Tuesday. 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 3.00 million was traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 3.00 million of Uttar Pradesh's 8.35%, 2029 bond was dealt at a weighted average yield of 6.5987%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

With inputs from Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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