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Informist, Monday, Mar. 9, 2026

By Vaishali Tyagi

NEW DELHI – Yields on corporate bonds surged in the secondary market Monday, tracking the rise in government bond yields, dealers said. Both mutual funds and banks sold bonds across tenors, aiding the rise in yields. However, activity remained concentrated in corporate bonds maturing in up to five years, they said. Bonds with maturity beyond five years saw very few trades.

Government bond yields shot up as Brent crude futures jumped over 20% to near $120 per barrel, the highest level since June 2022. The surge in crude oil prices and the fall in the rupee as the military conflict in West Asia escalated sparked gilt selling, driven by fears of rising inflation and a widening current account deficit, dealers said. However, government bonds recovered slightly after the Reserve Bank of India set cut-off prices significantly higher than expected at the open market operations auction, dealers said. The 10-year benchmark 6.48%, 2035 gilt yield ended at 6.7184%, up from 6.6898% Friday. 

"Corporate bonds (yields) were up today (Monday) as G-sec (government securities) yields have risen due to a mix of global and domestic reasons," a dealer at a broking firm said. "Crude price rise is putting upward pressure on G-sec yields. Risk-off sentiment is leading to more and more selling in emerging markets which pushed yields even higher."

In the secondary market, deals aggregating to INR 104.05 billion were recorded on the National Stock Exchange and BSE combined Monday, up slightly from INR 95.77 billion Friday. Mutual funds and banks were seen actively selling shorter-tenure bonds. Insurance companies were also trading bonds across tenures. Pension funds and companies were absent from the market, dealers said. 

Paper issued by Aditya Birla Capital, Canara Bank, Kerala Infrastructure Investment Fund Board, National Highways Infra Trust, Mahindra & Mahindra Financial Services, Andhra Pradesh State Beverages Corp., Muthoot FinCorp, Bank of Baroda, Piramal Capital & Housing Finance, and HDFC Credila Financial Services were traded the most.

In the primary market, bond issuances fell slightly to INR 41.20 billion Monday from INR 47 billion Friday. North Eastern Electric Power Corp. Ltd., a wholly-owned subsidiary of NTPC Ltd., raised INR 4 billion at a semi-annual coupon of 7.59% on 10-year bonds maturing on Mar. 11, 2036. The bonds carry a separately transferable redeemable principal part structure, where the principal and coupon payments are stripped and sold separately to investors. This allows issuers to offer part payment of principal along with due interest at pre-defined tenures. 

Primary market activity has slowed significantly since the military conflict broke out in West Asia and issuers are likely to hold off until the situation stabilises. Tuesday, over INR 7 billion worth of bonds will hit the market. Kisetsu Saison Finance (India) will raise up to INR 3 billion by issuing bonds maturing on Apr. 11, 2028. ECap Equities Ltd. plans to raise INR 2.7 billion through the reissuance of three-year-one-month bonds maturing on Apr. 23, 2029.

Dealers expect primary market activity to stay low because of volatility and hardening yields. Issuers may tap the market only if they have specific needs, but this could lead to investors demanding a risk premium, pushing yields higher, they said. For now, issuers are likely to just wait and watch.

UDAY BONDS

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In the secondary market, two Ujwal DISCOM Assurance Yojana bonds aggregating to INR 150.00 million were traded Monday, 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 6.9002%

* INR 50.00 million of Uttar Pradesh's 8.63%, 2029 bond was dealt at 6.9006%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End 

Edited by Rajeev Pai

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