India Corporate Bonds
Short-term bond yields steady amid muted appetite
This story was originally published at 20:44 IST on 17 April 2026
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By Nandini Sinha
MUMBAI – Yields on the short-term corporate bonds were broadly steady Friday amid muted investor appetite and ample liquidity in the banking system, dealers said. Mutual funds bought corporate bonds aggressively as they continued to hold surplus cash, while banks mostly sold bonds, they said.
The net liquidity absorbed by the Reserve Bank of India, a proxy for surplus liquidity in the banking system, was INR 4.09 trillion Thursday, down from INR 5.21 trillion Wednesday. Indicative yields on three-year bonds of the National Bank for Agriculture and Rural Development were 7.33-7.38% Friday, compared with 7.35-7.38% the previous session. Yields on five-year bonds of NABARD were 7.45-7.53%, compared with 7.45-7.50% Thursday. The yields on 10-year NABARD bonds rose 7 basis points to 7.62-7.67% from 7.55-7.60% Thursday.
Dealers are wary about investing in the 10-year segment amid uncertainty around the geopolitical situation in West Asia, dealers said. Bonds maturing in up to 5 years were the most actively traded.
"On most Fridays they (market participants) tend to trim their trading portfolio ahead of the weekend, so rates were 1-2 basis points up on selling (of corporate bonds)," a dealer from a private sector bank said. Corporate bond issuances are expected to pick up pace in June after the government begins rolling out projects as part of its capital expenditure, the dealer said.
"Banks look for lucrative rates while trading in bonds. But that's not how insurance companies and pension funds work. They work based on a mandate (deploying the premium received). So they will buy bonds only when there's a mandate," the dealer quoted above said about insurance companies and pension funds buying long-term bonds.
Deals aggregating INR 176.82 billion were recorded in the secondary market on the National Stock Exchange and BSE combined Friday, up from INR 155.01 billion Thursday.
Papers issued by Navi Finserv, NABARD, Muthoot Microfin, Hinduja Leyland Finance, The Andhra Pradesh Mineral Development Corp., and Hyderabad Metropolitan Development Authority were traded the most.
In the primary market, bond issuances fell sharply to INR 11.70 billion Friday from INR 76.80 billion Thursday. On Monday, Summit Digitel Infrastructure plans to raise INR 19 billion, while L&T Finance aims to raise up to INR 5 billion.
UDAY BONDS
In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 2 million was traded Friday, according to data on the RBI's Negotiated Dealing System-Order Matching System.
* INR 2 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 7.2264%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Friday | Thursday |
Three-year | 7.33-7.38% | 7.35-7.38% |
Five-year | 7.45-7.53% | 7.45-7.50% |
10-year | 7.62-7.67% | 7.55-7.60% |
End
Edited by Saji George Titus
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