India Corporate Bonds
Yields fall sharply tracking gilts, surplus liquidity
This story was originally published at 20:20 IST on 8 April 2026
Register to read our real-time news.Informist, Wednesday, Apr. 8, 2026
By Nandini Sinha and Meera Nair
MUMBAI – Yields in the corporate bond market fell sharply Wednesday, tracking the fall in government bond yields amid the surplus liquidity in the banking system, dealers said. The Reserve Bank of India's Monetary Policy Committee's decision to leave the repo rate unchanged at 5.25% did not have much impact on the corporate bond market, dealers said. Bonds maturing in up to five years were traded the most Wednesday.
"Levels (yields) have been down since after the ceasefire (two-week pause in the war between the US and Iran) news came. Even before the MPC (Monetary Policy Committee) meeting happened, levels were down by 10-15 bps (basis points) and it continued even after the MPC meeting," a dealer at a brokerage firm said. The corporate bond market has not fully priced in the effect of the ceasefire between the US and Iran. "It will take a minimum of two weeks to say anything from now. I think (the) ceasefire has to continue, then only we can expect the fall in yields," a dealer at another private sector bank said.
The liquidity surplus in the banking system was INR 4.02 trillion Tuesday. The yield on the 10-year benchmark 6.48%, 2035 bond Wednesday fell 15 basis points to 6.8984%. Indicative yields on three-year bonds of the National Bank for Agriculture and Rural Development fell 23 bps to 7.45-7.50% from 7.68-7.72% Tuesday, while those on five-year NABARD bonds were 7.55-7.60%, down sharply from 7.75-7.80%. The yields on 10-year NABARD bonds fell to 7.65-7.70% from 7.70-7.75% Tuesday.
Deals aggregating INR 166.26 billion were recorded in the secondary market Wednesday on the National Stock Exchange and the BSE combined, down from INR 170.19 billion Tuesday. Buying was seen mostly in the three-year segment. "...especially in the 2028 and 2029 (segments), the maximum effect was seen...2028 (segment) being the sweet spot," a dealer at a private sector bank said.
Papers issued by the Small Industries Development Bank of India, Edelweiss Financial Services Ltd., HDB Financial Services Ltd., NABARD, Kerala Infrastructure Investment Fund Board, and Hyderabad Metropolitan Development Authority were traded the most.
In the primary market, bond issuances rose sharply to INR 7 billion from INR 400 million Tuesday. SMFG India Credit Co. Ltd. had Wednesday planned to raise up to INR 7 billion through five-year bonds maturing on Apr. 9, 2031. It could not be ascertained whether this issue was placed. Overall, activity in the primary market was low on the day the Monetary Policy Committee's meeting's decision was disclosed.
Trades in 10-year bonds are expected to rise after US and Iran agreed to a two-week ceasefire, a dealer at a private sector bank said. Trading in the segment has been low due to the uncertainty posed by the war.
Dealers are divided over primary bond issuances in April. While some dealers expect the issuances to rise, a dealer at a private sector bank said that borrowers would issue commercial papers and certificates of deposits to meet their requirements instead of issuing bonds. "Don't expect NABARD, PFC (Power Finance Corp.) and SIDBI to issue bonds this month," the dealer said.
"Companies will work on their strategies and they also need board approval to issue NCDs (non-convertible debentures). Expect issues (in the primary market) to rise next month," the private sector bank dealer said, explaining why primary issues could be low in April.
Inflows from foreign portfolio investors are not expected for at least the next two weeks due to volatility in the market. The RBI's lowering of India's GDP growth estimate to 6.8% from 6.9% for the June quarter and to 6.7% from 7% for the September quarter of the financial year 2026-27 (Apr-Mar) is also expected to weigh on investor sentiment, the dealer said. Foreign portfolio investors have been net sellers in the past few days, particularly in the short-term segment as the rupee fell to record lows. Foreign portfolio investors net sold INR 28.12 billion of shares Wednesday.
UDAY BONDS
In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 100 million was traded Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching System.
* INR 100 million of Uttar Pradesh's 8.44%, 2029 bond was dealt at 7.3685%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Wednesday | Tuesday |
Three-year | 7.45-7.50% | 7.68-7.72% |
Five-year | 7.55-7.60% | 7.75-7.80% |
10-year | 7.65-7.70% | 7.70-7.75% |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
With inputs from Vaishali Tyagi
Edited by Deepshikha Bhardwaj
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