India Corporate Bonds
Yields sharply up tracking gilts, crude oil prices
This story was originally published at 19:39 IST on 18 May 2026
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By Nandini Sinha
MUMBAI – The yields on corporate bonds ended sharply higher Monday tracking the rise in government bond yields and crude oil prices, dealers said. Papers maturing in up to three years were the most actively traded. Mutual funds were the most active participants, buying as well as selling papers actively, they said.
"The rates (on corporate bonds) rose tracking the g-sec (government securities) and inflationary pressures because of the crude prices," a dealer at a private sector bank said. "Looks like RBI (Reserve Bank of India) will hike the (repo) rate." The yield on the 10-year benchmark 6.48%, 2035 Indian government bond ended at 7.13% Monday, the highest level since Apr. 2.
Dealers also said that yields in the corporate bond market rose on Monday due to the spillover impact from the withdrawal of National Bank for Agriculture and Rural Development's bond issuance on Friday. NABARD's papers are considered a benchmark in the corporate debt market. The withdrawal of its issue signalled weak investor appetite, leading to a rise in yields across tenures. "Because NABARD papers are considered highly liquid. So, if that is undersubscribed, then it shows that there is not much demand by investors. So that pushes up the rates," a dealer at another private sector bank said.
The rates on the three-year bonds of NABARD were 7.90-7.95%, up 10 basis points from 7.80-7.85% Friday, while rates on the five-year NABARD bonds were 7.88-7.95%, up from 7.85-7.90% Friday. The indicative rates on the 10-year NABARD bonds rose to 7.85-7.95%, from 7.83-7.85% Friday, dealers said.
Market participants expect the yields on corporate bonds to rise, tracking the rise in crude oil prices. At 1555 IST, the Brent crude oil futures for July delivery traded at $110.29 per barrel. "The market will also track (the earnings) of IGL (Indraprastha Gas Ltd.) and ONGC (Oil and Natural Gas Corp. Ltd.)," the dealer at the private sector bank said. Indrasprastha Gas will announce its March quarter earnings on Monday. The company's standalone net profit for the reporting quarter is expected to fall to INR 2.94 billion, down nearly 16% on year, according to the average of estimates from 12 brokerages.
Bonds worth INR 45.50 billion were issued Monday, sharply up from INR 29.25 billion Friday. In the secondary market, deals aggregating INR 34.13 billion were recorded on the National Stock Exchange and BSE combined Monday at 1500 IST, sharply down from INR 51.22 billion at the same time Friday. Among the actively traded bonds, INR 5.21 billion worth of Bajaj Finance Ltd.'s bonds were traded and INR 3.28 billion worth of NABARD's papers were traded. Papers issued by Muthoot Microfin Ltd., The Andhra Pradesh Mineral Development Corp. Ltd., Cholamandalam Investment And Finance Co. Ltd., and Hyderabad Metropolitan Development Authority were also actively traded.
On Tuesday, Bajaj Finance Ltd. plans to raise up to INR 30 billion through 10-year bonds, while Kalpataru Properties Ltd. plans to raise INR 16.35 billion through four-year bonds. MAS Financial Services Ltd. seeks bids to raise INR 3.6 billion through five-year bonds while Muthoot MCred Ltd. will tap the market to raise INR 3 billion. Indel Money Ltd. has sought bids to raise up to INR 1.5 billion.
A total of INR 99.18 billion worth of deals were recorded on the National Stock Exchange and BSE combined in the secondary market Monday, marginally down from INR 100.82 billion Friday.
UDAY BONDS
In the secondary market, three Ujwal DISCOM Assurance Yojana bonds worth INR 25 million were traded Monday, according to data on the RBI's Negotiated Dealing System-Order Matching System.
* INR 10 million of Uttar Pradesh's 8.71%, 2028 bond was dealt at 7.9077%
* INR 10 million of Andhra Pradesh's 7.35%, 2029 bond was dealt at 7.4479%
* INR 5 million of Rajasthan's 8.19%, 2026 bond was dealt at 5.7773%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Tenure | Monday | Friday |
Three-year | 7.90-7.95% | 7.80-7.85% |
Five-year | 7.88-7.95% | 7.85-7.90% |
10-year | 7.85-7.95% | 7.83-7.85% |
End
US$1 = INR 96.35
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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