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Informist, Tuesday, May 5, 2026

 

By Nandini Sinha

 

MUMBAI – Yields on three- and five-year corporate bonds ended marginally higher Tuesday owing to weak market sentiment resulting from uncertainty over the ceasefire between the US and Iran, high crude oil prices, and weakening of the rupee, dealers said. Bonds maturing in up to five years were traded the most, dealers said.

In the secondary market, rates on three-year bonds of the National Bank for Agriculture and Rural Development were 7.67-7.75% Tuesday, up from 7.65-7.68% Monday. Yields on five-year bonds were at 7.68-7.75%. Yields on 10-year bonds were 7.70-7.75%, down slightly from 7.72-7.77% Monday. "There were no deals in the longer segments... we did not get any quotes," a dealer at a state-owned bank said.

 

Mutual funds participated actively in the secondary market, buying as well as selling corporate bonds. "MFs (mutual funds) could be selling one-year (bonds) and buying three-year (bonds)," the dealer said.

 

Deals aggregating to INR 93.39 billion were recorded in the secondary market on the National Stock Exchange and BSE combined Tuesday, down slightly from INR 96.16 billion Monday. Paper issued by Indiabulls Housing Finance Ltd., Telangana State Industrial Infrastructure Corp. Ltd., NABARD, Spandana Sphoorty Financial Ltd., and Kerala Infrastructure Investment Fund Board were the most actively traded.

 

The primary market saw issuances worth INR 5 billion Tuesday, down from INR 21.05 billion Monday. Akara Capital Advisors Pvt. Ltd. plans to raise up to INR 1.8 billion through the issuance of two bonds Wednesday. Kosamattam Finance Ltd. plans to raise INR 2 billion through tier-II bonds maturing on Nov. 7, 2031.

 

The fragile ceasefire between the US and Iran is the major reason for low issuances of corporate bonds in the primary market, according to dealers. "After (state) elections, now fuel prices may rise. Growth has also been slow... market is reacting to all this," the dealer at the state-owned bank said. Bond issuances in the primary market will pick up pace after June once the government's capital expenditure increases, a dealer at a private-sector bank said.

 

Yields on corporate bonds will fall from the current levels only if there are some positive developments relating to the war between the US and Iran, dealers said. The two sides launched fresh attacks against each other in the Strait of Hormuz, raising tensions once more. "Crude oil prices impact inflation and the market reacts to it. So for yields to come down, something positive must happen on that (US-Iran war) front," the dealer at the public-sector bank said. 

Dealers see 7.50-7.55% as attractive levels for public-sector undertakings to come up with bond issuances in the primary market. "Borrowers want to go for higher tenures at lesser yields, while investors demand higher yields at shorter tenures," the dealer at the public-sector bank said. "Banks have given attractive levels to investors in the five-year segment. NBFCs (non-banking finance companies) may come up with five-year papers."

 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 1 million was traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

* INR 1 million of Punjab's 8.47%, 2029 bond was dealt at 7.2311%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Tuesday	Monday
Three-year	7.67-7.75%	7.65-7.68%
Five-year	7.68-7.75%	--
10-year	7.70-7.75%	7.72-7.77%

 

End

 

Edited by Rajeev Pai

 

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