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Informist, Friday, Mar. 13, 2026

By Vaishali Tyagi

MUMBAI – Corporate bond yields surged in the secondary market Friday as mutual funds sold paper to meet redemption demands, dealers said. Other investors, including insurance companies and pension funds, also offloaded bonds to manage portfolios, adding to the pressure on yields.

"Mutual funds sold bonds to fulfil redemption requirements, leading to the sell-off," a dealer at a broking firm said. "In the last two days, there was redemption pressure. Along with that, they are major sellers because of advance tax outflows also." Dealers said there is a lack of confidence in market participants because of military conflict in West Asia.

The yield on the 10-year benchmark bond issued by National Bank for Agriculture and Rural Development rose 4-5 basis points to 7.47-7.50%. Indicative yields on three-year bonds of NABARD rose to 7.29-7.33% from 7.24-7.28% Thursday while those on five-year NABARD bonds were up at 7.34-7.41% from 7.29-7.34%. Traders attributed the rise in yields to sustained selling by mutual funds.

Dealers also attributed the rise in corporate bonds yields to a rise in government bond yields, driven by the rise in Brent crude oil contracts for delivery in May above $101.50 per barrel, with traders worrying about higher inflation in India if the West Asia hostilities continue beyond March.

Further, they said investors shifted focus to upcoming primary market issuances, especially from non-banking finance companies and top issuers like NABARD and Export-Import Bank of India, sparking selling pressure in the secondary market.

In the secondary market, deals aggregating to INR 124.75 billion were recorded on the National Stock Exchange and BSE combined, down significantly from INR 167.73 billion Thursday. The selling pressure came mostly from mutual funds while banks were largely on the buying side in selective segments. Pension funds and insurance companies also sold bonds. Most of the trading took place in segments maturing in 2028 and 2029. "Banks are trying to absorb as much as possible," the broking-firm dealer quoted above said. 

Paper issued by Punjab National Bank, Axis Finance, Indian Overseas Bank, Aditya Birla Capital, Kerala Infrastructure Investment Fund Board, Andhra Pradesh State Beverages Corp., ESAF Small Finance Bank, Piramal Capital & Housing Finance, Satin Creditcare Network, Telangana State Industrial Infrastructure Corp., and NABARD were traded the most.

In the primary market, bond issuances fell to a little over INR 40 billion Friday from INR 153 billion Thursday. Vedanta raised funds Friday but there was no confirmation from market participants about the amount or rates.

Monday, over INR 128 billion worth of bonds will hit the market. NABARD plans to raise up to INR 80 billion by issuing bonds maturing Jul. 17, 2029. Thursday, it had scrapped a plan to raise the same amount through seven-year bonds because of the higher coupon sought by investors. This was the third bond issuance to be cancelled by the state-owned company in this financial year.

EXIM Bank, another key issuer, has invited bids to borrow up to INR 40 billion through five-year bonds maturing Mar. 18, 2031. Apart from these key issuances, investors are keeping an eye on other issuers--India Infradebt, Niyogin Fintech, and Mangalam Worldwide--that are lining up to raise funds.

Dealers had mixed views on primary market activity. Some said issuances may stay low as issuers assess investor appetite and wait for yields to stabilise amid the geopolitical headwinds. Others expect issuers to tap the market to complete funding requirements for the financial year 2025-26 (Apr-Mar) before the year ends.

UDAY BONDS

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In the secondary market, three Ujwal DISCOM Assurance Yojana bonds aggregating to INR 17.80 million were traded Friday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

* INR 10.50 million of Andhra Pradesh's 7.35%, 2030 bond was dealt at 6.9295%

* INR 5.30 million of Haryana's 8.18%, 2026 bond was dealt at 6.0324%

* INR 2.00 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 6.6668%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

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

Edited by Rajeev Pai

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