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Informist, Thursday, Feb. 12, 2026

By Vaishali Tyagi

NEW DELHI – Yields on three-year and five-year corporate bonds fell by three to four basis points in the secondary market Thursday as mutual funds and investors aggressively bought bonds with maturity up to five years due to ample cash with them, dealers said. Buying interest from mutual funds increased due to inflows, pulling down the yields on bonds, they said. However, yields on 10-year bonds were largely steady as there were very few trades in 10-year and above tenure, they said. 

While some market participants said most traders were largely focused on primary market activity as issuances aggregating over INR 50 billion were scheduled Thursday down from INR 171.85 Wednesday. "The primary market is quite active these days, not just bonds but everyone participating in CP-CD (certificates of deposits and commercial papers) markets also due to funds available with them," a dealer at a brokerage firm said. 

In primary market, investors actively took part in Power Finance Corp. bond issuances where it issued two bonds worth INR 40 billion of different maturities. Both the issuances were fully subscribed. The power financier raised INR 20 billion through two-year bonds maturing on Feb. 16, 2028, at a coupon of 6.92%. The company raised another INR 20 billion by issuing five-year bonds maturing on Feb. 17, 2031, at a coupon of 7.24%.

"The corporate bond market is buzzing with activity post key issuances this week," the dealer quoted above said. "Activity rose today after good response to Power Finance Corp. bond issuance, 2-year maturity has realigned the market because (yesterday) in secondary market PFC (Power Finance Corp.) was trading around 7.05 levels, while 5-year primary dealt exactly at secondary market level. Yet, the relatively small issue (of PFC) size gave market some comfort."

Market participants said activity is expected to remain strong, with several primary bond issuances coming to market. The rise in supply indicates that companies are no longer waiting for borrowing costs to ease and have come to terms with the view that yields are unlikely to decline significantly in the near future.

Investors are showing keen interest due to ample liquidity in the system, dealers said. According to the latest data, the net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--fell to INR 2.86 trillion Wednesday from INR 3.37 trillion Tuesday. Banks parked around INR 500 billion less funds in the SDF window Wednesday, at INR 4.23 trillion.

In secondary market, overall volume with deals aggregating to INR 87.07 billion were recorded on the National Stock Exchange and BSE combined Thursday, compared with INR 90.96 billion Wednesday. Bonds issued by Receivable Securitisation Trust, Nabkisan Finance, Andhra Pradesh State Beverages Corp., HDB Financial Services, Kerala Infrastructure Investment Fund Board, Telangana State Industrial Infrastructure Corp., National Bank For Agriculture and Rural Development, Tata Capital Financial Services, and IIFL Finance were traded the most.

While some market participants said banks and mutual funds were largely on buying side in the secondary market, however, a handful of mutual funds were seen selling bonds, dealers said. Insurance companies and pension funds were largely absent from the secondary market as they were seen more active in the primary market, dealers said.

UDAY BONDS

In the secondary market, five Ujwal DISCOM Assurance Yojana bonds were traded Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 31.78 million of Haryana's 8.21%, 2026 bond was dealt at 5.9270%

* INR 17.00 million of Rajasthan's 8.39%, 2026 bond was dealt at 5.9347%

* INR 13.90 million of Rajasthan's 8.19%, 2026 bond was dealt at 5.9592%

* INR 12.00 million of Andhra Pradesh's 7.35%, 2030 bond was dealt at 7.0649%

* INR 7.00 million of Rajasthan's 8.21%, 2026 bond was dealt at 5.8496%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

Edited by Akul Nishant Akhoury

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