India Corporate Bonds
Yields flat on surplus liquidity; MFs major buyers
This story was originally published at 20:23 IST on 16 April 2026
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By Nandini Sinha and Meera Nair
MUMBAI – Yields in the corporate bond market ended flat Thursday due to ample liquidity in the banking system, dealers said. The short-term segments rallied briefly during the day, tracking the rise in government bond yields, dealers said. Bonds maturing in up to three years were traded the most.
The net liquidity absorbed by the Reserve Bank of India, a proxy for surplus liquidity in the system, was INR 5.21 trillion Wednesday, up from INR 5.13 trillion Tuesday.
Volumes were higher in the three-year segment on demand from mutual funds, a dealer from a private-sector bank said. Mutual funds also sold some corporate bonds along with banks. The 10-year bond was not traded as much as uncertainty about the war in West Asia still persists, a dealer from a state-owned bank said.
"Volumes (in the short-term segments) will be higher because mutual funds have money, so they will buy. Also, because they have investments coming in, but that's not the case with banks. They need more margin to make profits. For mutual funds, even 2-3 bps (basis points) difference makes a huge profit so for them churning will happen and they will buy in huge quantums as well. The market is expecting yields to go high, so that we (banks) can buy," a dealer from a private-sector bank said.
Indicative yields on the three-year, five-year and 10-year bonds of the National Bank for Agriculture and Rural Development were unchanged at 7.35-7.38%, 7.45-7.50% and 7.55-7.60%, respectively, dealers said.
Deals aggregating INR 155.01 billion were recorded in the secondary market on the National Stock Exchange and BSE combined Thursday, down from INR 171.68 billion Wednesday.
Papers issued by Bajaj Housing Finance, NABARD, IIFL Finance, Adani Enterprises, Andhra Pradesh State Beverages Corp., and Hyderabad Metropolitan Development Authority were traded the most. Manappuram Finance, Akme Fintrade (India), and Edel Finance Co. plan to raise funds in the primary market Friday.
Reports of the US and Iran agreeing in principle to extend the two-week ceasefire had a positive effect on the corporate bond market, the dealer from the state-owned bank said. The rates on corporate bonds could fall more, tracking the government bonds, the dealer said. "G-sec (yield on 10-year government security) could fall to 6.75%-6.80% band by next week," the dealer said. Thursday, the 10-year benchmark 6.48%, 2035 gilt closed at a yield of 6.8884%, up from 6.8662%.
UDAY BONDS
No Ujwal DISCOM Assurance Yojana bond was traded Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching system.
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Thursday | Wednesday |
Three-year | 7.35-7.38% | 7.35-7.38% |
Five-year | 7.45-7.50% | 7.45-7.50% |
10-year | 7.55-7.60% | 7.55-7.60% |
End
Edited by Saji George Titus
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