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Informist, Thursday, Jun. 25, 2026

By Nandini Sinha

MUMBAI – Yields on three- and five-year corporate bonds ended lower Thursday tracking the fall in the yields on Indian government bonds, dealers said. Volumes fell sharply in the secondary market as traders refrained from taking positions ahead of the weekend. On Friday, Indian financial markets will be shut on account of Muharram.

The yields on three-year bonds issued by the National Bank for Agriculture and Rural Development were down over 3-4 basis points at 7.25-7.29% from 7.29-7.32% Wednesday, while the indicative yields on NABARD's five-year bonds were 7.33-7.36% from 7.35-7.40% Wednesday. The indicative yields on NABARD's 10-year bonds were down 5 bps at 7.40-7.45% from 7.45-7.50% Wednesday.

Market participants were divided on the impact of REC Ltd.'s primary market bond auction. While some felt the REC auction contributed to the fall in yields in the secondary market, others said that the lower cut-offs on REC bonds were actually a result of the broader decline in corporate bond yields.

State-run REC raised a total of INR 54.95 billion through two bonds Thursday in the primary market. Tapping the primary market for the third time this month, the power sector financier raised INR 28.45 billion through the issuance of five-year bonds at 7.17%. REC also raised INR 26.50 billion through the reissue of the 7.46%, June 2028 bonds. It set the cut-off yield at 7.10%. "Mutual funds and banks were major participants seen at REC auction," a dealer at the private sector bank said. "Mutual funds are booking profits and building their portfolios in the shorter segment."

The primary market recorded issuances worth INR 80.76 billion Thursday, sharply up from INR 56.65 billion worth of papers issued Wednesday. Aditya Birla Capital raised INR 1 billion through the reissue of the 8.26%, June 2031 bond at a yield of 7.9799%, dealers said. Cube Highways Trust raised INR 6.37 billion through the issuance of March 2028 bonds at 7.3925%.

In the secondary market, deals aggregating to INR 134.39 billion were recorded on the National Stock Exchange and BSE combined Thursday, sharply down from INR 225.25 billion recorded Wednesday. Dealers said volumes were higher on Wednesday as traders front-loaded bond purchases ahead of the long weekend, which pushed up activity. However, some traders booked profits Thursday by trimming positions.

Papers issued by Navi Finserv, Mahindra and Mahindra Financial Services, Bajaj Housing Finance, Small Industries Development Bank of India and REC were traded actively Thursday.

Corporate bond issuances have picked up pace after yields fell significantly this month, supported by the Reserve Bank of India's Monetary Policy Committee's decision to not hike the repo rate and the US-Iran peace deal. The yields on the three-year corporate bonds have fallen by around 75 bps since May 21. "NBFCs (non-banking financial companies) are coming up with heavy issuances since the yields fell," the dealer at the private sector bank said. "FPIs (foreign portfolio investors) are investing in the NBFC segment."

On Monday, LIC Housing Finance will tap the market to raise up to INR 30 billion through the reissue of the 7.59%, June 2031 bonds while Sundaram Finance will seek to raise INR 7.5 billion through the reissue of the 7.75%, August 2028 bonds. 

Lodha Developers plans to raise INR 3 billion through floating-rate bonds maturing in February 2030. Hero FinCorp will seek bids for up to INR 2 billion through the issuance of zero-coupon bonds while Vivriti Capital seeks to raise INR 2 billion through the issuance of two bonds with different maturities. India Residential Mortage Trust will seek bids for INR 1.8 billion through the issuance of February 2045 bonds while Muthoot Capital Services has sought bids for up to INR 1.5 billion through two-year bonds.

Traders expect corporate bond yields to stay flat or rise marginally Monday. "Unless Israel, Iran or the US do something, (I) don't think something (movement in corporate bond yields) will happen," the dealer at the private sector bank said. "Expect them (corporate bond yields) to be flattish or up 2-3 bps," a dealer at a public sector bank said. "They (corporate bond yields) have fallen a lot, could come up (rise) by a few bps."  

UDAY BONDS

In the secondary market, no Ujwal DISCOM Assurance Yojana bonds were traded Thursday, 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 Akul Nishant Akhoury

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