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Informist, Wednesday, May 20, 2026

By Nandini Sinha

MUMBAI – Yields on corporate bonds ended marginally lower Wednesday tracking the fall in Indian government bond yields, dealers said. Corporate bond yields had risen in early trade due to selling pressure by non-banking financial companies. "There is selling pressure (by NBFCs) as they require funds...it's not a buying market," a dealer at a state-owned bank said. 

Bonds worth INR 92.65 billion were issued Wednesday, more than double the INR 38.55 billion issued Tuesday mainly due to issuances by NBFCs. In the secondary market, deals aggregating INR 54.86 billion were recorded on the National Stock Exchange and BSE combined Wednesday at 1500 IST, marginally up from INR 53.38 billion at the same time Tuesday.

The yield on the benchmark 10-year 6.48%, 2035 Indian government bond settled at 7.08%, down from 7.11% Tuesday. The yields on the three-year bonds of the National Bank for Agriculture and Rural Development were 7.83-7.93%, almost unchanged from 7.85-7.90% Tuesday. The yields on NABARD's five-year bonds were 7.88-7.95%, down marginally from 7.90-7.95% Tuesday. The indicative yield on the 10-year NABARD bonds was 7.88-7.90% against 7.90% Tuesday. Mutual funds and NBFCs actively sold corporate bonds, while insurance companies and banks were active buyers.

Papers in the 2026-2030 segment and those issued by public sector undertakings were actively traded. "They (PSU bonds) are highly liquid securities...if you look at the last two years, the carry has been good. 7.90% is a good level," the dealer quoted above said.

The expectation that the Reserve Bank of India is likely to pay a higher-than-expected surplus to the government also contributed to PSU bonds being actively traded Wednesday. "Dividend is expected to be more than 3 lakh crore (INR 3 trillion)," a dealer at another state-owned bank said. "Liquidity levels are going to increase and the market is expected to rally, so PSUs are looking to raise funds."

Among the actively traded bonds, INR 6.76 billion of Power Finance Corp. bonds were traded and INR 5.67 billion worth of Goswami Infratech papers were traded. HDB Financial Services' papers worth INR 5.1 billion were traded. 

On Thursday, Mahindra Rural Housing Finance Ltd. will tap the market to raise INR 4 billion through three-year floating rate bonds, while 360 One Prime Ltd. will seek to raise up to INR 3 billion through a reissue of its May 2028 bonds.

Market participants have a 'wait-and-watch' approach on corporate bond yields for the rest of the week due to the continuing uncertainty over the US-Iran war. A lot depends on whether US President Donald Trump will make a statement on the war or if the RBI makes an announcement, the dealer quoted in the first instance said. "Rates are likely to remain elevated...market is pricing the expected rate hike." 

However, another dealer was of the view that yields would remain steady as tensions between the US and Iran are unlikely to escalate. "Trump mostly speaks to scare (Iran)...they have to protect the US markets now," the dealer from the second public sector bank said. 

Fears of a rise in inflation have led to a rise in US Treasury yields. The 30-year US Treasury yield rose to 5.20% Tuesday, the highest level since 2007. 

A total of INR 111.83 billion worth of deals in corporate bonds were recorded on the National Stock Exchange and BSE combined, up from INR 101.02 billion Tuesday.

UDAY BONDS

In the secondary market, three Ujwal DISCOM Assurance Yojana bonds worth INR 7 million were traded Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

* INR 4.5 million of Uttar Pradesh's 8.75%, 2030 bond was dealt at 7.5524%

* INR 2 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 7.3262%

* INR 500,000 of Uttar Pradesh's 8.77%, 2031 bond was dealt at 7.8286%

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Pankaj Aher

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