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Informist, Wednesday, Feb. 18, 2026

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds in the secondary market ended higher as traders sold bonds in absence of cues which they had overbought earlier, dealers said. Traders are selling longer tenure bonds and shifting to very short-term bonds, maturing in 2027 or 2028. Yields on corporate bond rose 3-4 basis points due to thin trading volumes, with demand lacking behind supply, they said.

Merchant bankers said that market remained data-dependent for cues to take bets, dealers said. "Traders have lightened positions on overbought corporate bonds, but the market may remain data-dependent for now and waiting for more cues, with the longer end already priced in," a dealer a brokerage firm said. 

"There's vetting happening now, and until the next MPC (Reserve Bank of India's Monetary Policy Committee), the yields will not rise or it might go 5-10 basis points up but will not sustain there and will gradually come down," a fund manager at a mutual fund house said.

Corporate bond yields also rose tracking rise in government bonds yields, dealers said. Yields on government bonds ended marginally higher as traders placed short bets on gilts to make room for fresh supply at the INR-330-billion weekly gilts auction Friday and more supply of bonds maturing in six years and more at the INR-250-billion gilt switch auction Monday, dealers said. A rise in US Treasury yields also weighed on gilt prices, they said. The 10-year benchmark 6.48%, 2035 gilt yield closed at 6.6780%, up from 6.6600% at the end of the previous session. Financial markets administered by the Reserve Bank of India are shut Thursday for Shivaji Jayanti.

In the secondary market, deals aggregating to INR 112.33 billion were recorded on the National Stock Exchange and BSE combined Wednesday, lower from INR 126.79 billion Tuesday. Mutual funds, insurance companies and banks were seen actively buying shorter tenure bonds while selling longer tenure paper. Pension funds and companies were also seen trading but in low volumes as they were mostly active in primary market, dealers said. "There's more demand for 3-year corporate bonds due to increased primary issuances in this segment, and secondary market volumes are thin, resulting in yields being 3-4 basis points higher," dealers said. The market is seeing a surge in short-term bond issuances, with a focus on bonds with maturities up to five years.

Papers issued by Tata Capital Financial Services, National Bank For Agriculture and Rural Development, UGRO Capital, Anand Rathi Global Finance, Cholamandalam Invtestment and Finance Co. Ltd., Mahindra & Mahindra Financial Services, Navi Finserv, IIFL Samasta Finance, HDB Financial Services, Krazybee Services, Power Finance Corp., were traded the most on exchanges Wednesday.

Activity in the primary market rose significantly with issuances worth INR 105 from INR 5.65 billion scheduled for Tuesday. Dealers said bond issuances are expected to pick up going forward. Wednesday, REC Ltd. raised INR 28.35 billion through bonds maturing on Feb. 18, 2028, at 6.95%. "REC, we were expecting (coupon to be) 6.90-6.92% but it gone till 6.95% that too not fully subscribed," a dealer at a state-owned bank said. "For rate transmission to continue, this comfortable liquidity should persist for longer time."

According to the latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was at INR 2.62 trillion Tuesday, up from INR 2.59 trillion Monday. On Tuesday, there was INR 19.74 billion worth of inflows for coupons and redemption of state bonds. 

Thursday, issuances aggregating to INR 60 billion are scheduled. One of the key issuers is National Bank for Financing Infrastructure and Development, which plans to raise up to INR 50 billion through the issuance of bonds maturing on Mar. 20, 2028. Shriram Pistons and Rings has invited bids to raise INR 10 billion through two bonds--one maturing in two years and the other in one year six months. 

UDAY BONDS

In the secondary market, five Ujwal DISCOM Assurance Yojana bonds worth INR 44.00 million were traded Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 20.00 million of Uttar Pradesh's 8.49%, 2030 bond was dealt at 7.5954%

* INR 8.00 million of Punjab's 8.62%, 2030 bond was dealt at 7.0974%

* INR 8.00 million of Rajasthan's 8.39%, 2026 bond was dealt at a weighted average of 8.0008%

* INR 3.00 million of Tamil Nadu's 7.70%, 2032 bond was dealt at 7.6051%

* INR 3.00 million of Uttar Pradesh's 8.44%, 2029 bond was dealt at 7.4966%

* INR 2.00 million of Tamil Nadu's 7.72%, 2032 bond was dealt at 7.6041%

BENCHMARK LEVELS FOR CORPORATE BONDS

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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