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Informist, Monday, Jun. 22, 2026

By Vaishali Tyagi

NEW DELHI – Corporate bond yields ended steady in the secondary market Monday as trading remained mixed because mutual funds were rebalancing portfolios while other participants stuck to need-based trades, dealers said. With no major domestic or global cues, a few market participants also avoided taking aggressive positions, they said. 

However, portfolio reshuffling led to higher secondary market volumes as demand from mutual funds with excess cash was fullfilled by selling from other traders, mainly a few large mutual funds facing redemption pressure. This balance kept yields largely unchanged, dealers said. Tightness in the banking system's liquidity limited agressive participation from mutual funds and other investors, keeping yields in a narrow band. The net liquidity absorbed by the RBI, an indicator of the surplus liquidity in the banking system, was INR 306.85 billion Sunday, down from INR 322.03 billion Saturday and INR 351.91 billion Friday, according to the latest release.

"The market has already rallied last week quite a bit, but now traders are not taking any further aggressive bets as key triggers are missing," a fund manager at a mutual fund house said. "Liquidity is also not good, which leaves little room for further movement in yields, as it (tight liquidity) did not allow investors to trade aggressively."

The yields on three-year bonds issued by the National Bank for Agriculture and Rural Development were 7.35-7.40%, against 7.32-7.40% Friday. The indicative yields on NABARD's five-year bonds were 7.37-7.44% against 7.35-7.45% Friday, while the indicative yields on NABARD's 10-year bonds were unchanged at 7.50-7.55%.

Market participants expect yields in the secondary market to remain in a narrow band till the time some major issuance happens in the primary market or some other major global cues, dealers said. Merchant bankers expect a few large issuers to tap the primary market, which will provide some cues to secondary market. "The war situation has also improved as US-Iran talks are progressing, which has kept crude prices on the lower side," the fund manager quoted above said. That's adding to stable market conditions. This improvement may bring yields down and could lead some issuers to come to the market, so we may see some borrowing announcements by PSUs (public sector undertakings) or banks." Crude oil prices stayed below $80 per barrel following progress reported by the US and Iran in negotiations. 

In the secondary market, overall trade volume aggregating to INR 141.26 billion was recorded on the National Stock Exchange and BSE combined Monday, compared with INR 164.35 billion Friday. Mutual funds traded across tenures, while banks were active in the shorter tenures. A few insurance companies, along with a handful of pension funds, were active traders in the longer tenure. 

Papers issued by large non-banking financial companies and public sector undertaking were traded the most Monday. Bajaj Finance, Tata Capital Housing Finance, Piramal Finance, Kerala Infrastructure Investment Fund Board, Small Industries Development Bank of India, National Bank For Financing Infrastructure And Development, Andhra Pradesh State Beverages Corp., and Indian Railway Finance Corp., were traded the most on bourses. 

Monday, primary market activity had significantly picked up with bond issuances aggregating to INR 48.25 billion, compared to the sole issue of Edel Finance Co. worth INR 1.50 billion on Friday. Indian Renewable Energy Development Agency Ltd. raised INR 15 billion at a coupon of 7.34% via three-year bonds and the issue was fully subscribed. Market participants said IREDA's coupon on its issuance was in line with expectations. 

On Tuesday, issuances aggregating to INR 117.40 billion are scheduled. Torrent Power plans to raise a total of INR 38 billion through the issuance of four bonds with different maturities. Bajaj Finance has invited bids to raise up to INR 20 billion by issuing five-year bonds maturing, while LIC Housing Finance will seek bids to raise up to INR 35 billion through the issuance of bonds maturing on Nov. 23, 2029. MAS Financial Services, CreditAccess Grameen, and Credial Financial Services are few others which has invited bids to raise funds Tuesday. 

The outlook for the primary corporate bond market remains positive, dealers said. Most issuances of NBFCs are currently requirement-based or for refinancing, so volumes are expected to stay moderate in the near term until some large entities tap the primary market. "With yields having softened a bit, issuers are lining up deals and issuers are tapping the market opportunistically," a dealer at a brokerage firm said.  

On the external commercial borrowing front, dealers expect some PSUs and large state-owned agencies to announce their borrowing plans soon. However, many are likely to meet their quarterly targets from the domestic market first, since funding conditions remain favourable here, the fund manager said.  

UDAY BONDS

In the secondary market, no Ujwal DISCOM Assurance Yojana bonds were traded Monday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS: 

End

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

Edited by Deepshikha Bhardwaj

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