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Informist, Tuesday, Jun. 9, 2026

 

By Nandini Sinha

 

MUMBAI – Yields on three- and five-year corporate bonds fell for the third consecutive session on Tuesday due to strong buying pressure from foreign portfolio investors, dealers said. Papers maturing in up to five years were actively traded. Mutual funds also bought corporate bonds, while some public sector undertakings and private sector banks were seen selling.

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development fell 13-14 basis points to 7.35-7.39% from 7.48-7.53% Monday. NABARD's five-year bonds were dealt at 7.37%, down over 15 bps from 7.52-7.55% Monday. NABARD's 10-year bonds were not traded Tuesday. 

 

"If G-secs (government securities) spread was 20 bps between five- and 10-year (bonds), now it's 40 bps. There has been a steepening in the curves--G-sec, corporate bonds, SDL (state development loans)," a dealer at a private sector bank said, referring to the market reaction to the Reserve Bank of India Monetary Policy Committee leaving the repo rate unchanged.

 

Traders will closely track NABARD's reissue of July 2029 papers Wednesday to raise up to INR 70 billion. Market participants expect the cut-off for the reissue to be between 7.40% and 7.50%. Active participation by FPIs is expected at the NABARD bond auction after strong participation at the REC auction Monday, dealers said.

 

"It is the first PSU (public sector undertaking) issue after the positive news (no rate hike)," the dealer at a private sector bank said. "Every 30 bps softening in G-secs (government securities) and SDL (state development loans) is a good opportunity for corporate bonds (for investors)," the dealer said. "If REC was dealt at 7.38% yesterday (Monday), NABARD (cut-off) will be 10 bps more."

 

Bonds worth INR 1.5 billion were issued Tuesday, sharply down from INR 32.30 billion worth of papers issued Monday. In the secondary market, volumes rose sharply from Monday.

 

NABARD papers worth INR 40.37 billion were traded. Papers issued by the Small Industries Development Bank of India, Bajaj Housing Finance Ltd., IIFL Samasta Finance Ltd., and Indian Railway Finance Corp. were also actively traded.

 

In addition to NABARD, other sizeable issuances are also lined up for Wednesday. Tata Capital will seek bids to raise up to INR 20.3 billion through three-year bonds, while Tata Capital Housing Finance will seek to raise up to INR 11.25 billion through five-year bonds. HDB Financial Services plans to raise up to INR 17 billion through three bonds, including two reissues. Axis Finance will also seek bids to raise up to INR 8 billion through floating-rate bonds maturing in January 2029. The coupon on the bonds is linked to the 91-day Treasury bill with a spread of 215 basis points.

 

Traders expect the trajectory of corporate bond yields will now be guided by factors such as inflation and developments in the US-Iran war. "The initial reaction (to the MPC meeting outcome) was done today. Tomorrow onwards, macroeconomy, how the war gets panned out (will impact corporate bond yields)," the dealer at the bank said. The dealer expects buying momentum to continue on the back of the slew of positive measures announced by the government and the RBI and increase further if crude oil prices fall below $90. 

 

A total of INR 185.99 billion worth of deals were recorded on the National Stock Exchange and BSE combined, sharply up from INR 158.38 billion Monday.

 

UDAY BONDS

In the secondary market, four Ujwal DISCOM Assurance Yojana bonds worth INR 8 million were traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

* INR 3.0 million of Uttar Pradesh's 8.49%, 2028 bond was dealt at 7.0825%

* INR 2.5 million of Uttar Pradesh's 8.35%, 2029 bond was dealt at 7.1314%

* INR 2 million of Uttar Pradesh's 8.75%, 2030 bond was dealt at 7.4216%

* INR 500,000 of Uttar Pradesh's 8.77%, 2031 bond was dealt at 7.6092%

 

BENCHMARK LEVELS FOR CORPORATE BONDS: 

 

Tenure	Tuesday	Monday
Three-year	7.35-7.39%	7.48-7.53%
Five-year	7.37%	7.52-7.55%
10-year	--	7.70.7.73%

 

End

 

US$1 = INR 95.35

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

 

Edited by Saji George Titus

 

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