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Informist, Wednesday, Mar. 4, 2026

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds in the secondary market rose as investors demanded higher rates and some mutual funds sold bonds amid an uncertain environment, dealers said. Yields on corporate bonds were stable at the start of the week, with traders refraining from placing aggressive bets after the attack by the US and Israel on Iran Saturday, followed by Tehran's retaliation over the weekend, they said.

As tensions escalated, corporate bond yields increased, tracking gilt yields, which rose as the West Asia military conflict pushed up crude oil prices and US treasury yields, dealers added.

"Yields are going up as there are fears of inflation shooting up due to crude prices driven by the tension in Middle East (West Asia), nobody would want to take risk due to uncertainty... everyone is just living by the day," a fund manager at a mutual fund house said. Whle yields are rising due to uncertainty, they are likely to fall if peace talks materialise. "If tomorrow the peace talks start..then market will rally back," a dealer at a brokerage firm said.

Banks and mutual funds were involved in need-based trading of bonds, while a few mutual funds sold bonds of up to five-year maturity. Companies, pension funds and insurance companies were largely absent from the secondary market, dealers said. The volume of trades in the secondary market rose marginally, with deals aggregating to INR 86.49 billion being recorded on the National Stock Exchange and BSE combined, against INR 66.37 billion Monday.

Papers issued by Housing and Urban Development Corp., Cholamandalam Investment and Finance Co., Tata Capital Financial Services, National Highways Authority of India, Power Finance Corp., Kerala Infrastructure Investment Fund Board, Power Finance Corp., and Andhra Pradesh State Beverages Corp. were traded the most.

In the primary market Wednesday, bond issuances rose to nearly INR 192 billion from INR 7.8 billion Monday. Bank of Baroda raised INR 100 billion at a coupon of 7.10% on green infrastructure bonds maturing on Mar. 5, 2033 The issue was fully subscribed. Another state-backed entitity, Small Industries Development Bank of India, scrapped its issuance of bonds maturing on Jul. 10, 2029, as investors demanded higher coupon. The company had planned to raise up to INR 80 billion through the issue.

Dealers said while there is uncertainity around the West Asia conflict, this isn't likely to immediately impact companies' fundraising plans. Investors are watching the situation closely, and if tensions escalate, they may shift to safer assets, potentially impacting corporate bond yields and supply. "Investors are looking for clarity...if situation gets better, we may make some announcement plans immediately but it is a risk-off mode right now," said the dealer quoted earlier.

UDAY BONDS

In the secondary market, four Ujwal DISCOM Assurance Yojana bonds worth INR 163.30 million were traded Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 100.00 million of Uttar Pradesh's 8.44%, 2029 bond was dealt at 6.6517%

* INR 50.00 million of Uttar Pradesh's 8.63%, 2029 bond was dealt at 6.6486%

* INR 11.30 million of Telangana's 8.08%, 2029 bond was dealt at 6.6600%

* INR 2.00 million of Uttar Pradesh's 8.14%, 2026 bond was dealt at 5.8644%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Avishek Dutta

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