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Informist, Monday, May 25, 2026

 

By Nandini Sinha

 

MUMBAI – Yields on corporate bonds ended lower Monday due to improved market sentiment as optimism grew over a US-Iran peace deal, dealers said. However, volume in the secondary market fell as investors remained cautious amid uncertainty over the war. Non-banking financial companies led bond issuances Monday, contributing to a sharp rise in the volumes in the primary market. Mutual funds, the most active participants in the secondary market, bought and sold papers maturing in up to three years.

 

Bonds worth INR 111 billion were issued Monday, sharply up from INR 2.05 billion of papers issued Friday. In the secondary market, deals aggregating INR 49.65 billion were recorded on the National Stock Exchange and BSE combined at 1500 IST, down from INR 53.60 billion at the same time Friday. 

 

The yields on the three-year bonds of the National Bank for Agriculture and Rural Development were 7.86-7.95%, down 8 basis points from 7.94-7.99% Friday, while yields on NABARD's five-year bonds were down 5 bps at 7.90-7.96% from 7.95-8.01% Friday. The indicative yield on the 10-year NABARD bonds was 7.79-7.85%, down 6 bps from 7.85-7.88% Friday. 

 

"There was a gap between offer and bids...bids were not that aggressive," a dealer at a public sector bank said. "There has been a development between US and Iran, but the (peace) deal has not been signed yet...investors are still cautious."

Among the actively traded bonds, INR 6 billion of NABARD bonds were traded and INR 4.4 billion worth of Aurore Life Sciences' papers were traded. Papers issued by Housing and Urban Development Corp. Ltd., IIFL Finance Ltd., REC Ltd., and Hyderabad Metropolitan Development Authority were also actively traded. 

On Tuesday, NHPC Ltd. will tap the market to raise up to INR 20 billion through 15-year separately transferable redeemable principal part structure (STRPP) bonds. Under STRPP bonds, the principal and coupon payments are stripped and sold separately to investors.

 

Market participants are divided over the expected cut-off at the auction for NHPC bonds Tuesday. While one market participant expects the cut-off to be 7.75-7.80%, others expect the cut-off range to be on a higher side at 7.89-7.95%. "Demand is there from insurance companies and PFs (pension funds)," the dealer from the state-owned bank said. "Maybe they will tie up and close (the deal)." Banks are not expected to bid aggressively at the auction. "Banks are getting the same rate in two, three-year NABARD bonds," the dealer said.

 

Bajaj Housing Finance Ltd. will seek bids to raise up to INR 20 billion through five-year bonds, while Kotak Mahindra Prime Ltd. plans to raise up to INR 7 billion through bonds maturing on Jun. 20, 2031. 

 

Yields on corporate bonds may rise this week due to redemption pressure on mutual funds and due to uncertainty over developments in the US-Iran war. "Some (market participants) think it's (the fall in yields on Monday) only a one-, two-day improvement," the dealer at the state-owned bank said. 

 

A total of INR 80.29 billion worth of deals in corporate bonds were recorded on the National Stock Exchange and BSE combined, sharply down from INR 100.37 billion Friday.

 

UDAY BONDS

No Ujwal DISCOM Assurance Yojana bond was traded Monday, according to data on the RBI's Negotiated Dealing System-Order Matching system.

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Monday	Friday
Three-year	7.86-7.95%	7.94-7.99%
Five-year	7.90-7.96%	7.95-8.01%
10-year	7.79-7.85%	7.85-7.88%

 

End

 

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

 

With inputs from Meera Nair and Vaishali Tyagi

Edited by Deepshikha Bhardwaj

 

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