India Corporate Bonds
Ylds dn tracking gilts, buying by MFs, insurance cos
This story was originally published at 19:40 IST on 2 July 2026
Register to read our real-time news.Informist, Thursday, Jul. 2, 2026
By Nandini Sinha
MUMBAI – Yields on corporate bonds fell Thursday tracking the yields on government bonds and also due to buying by insurance companies and mutual funds, dealers said. Papers in the 2027-28 segment were actively traded. Banks actively bought as well as sold corporate bonds.
The yield on the 10-year benchmark 6.94%, 2036 Indian government bond settled at 6.7180%, down nearly 4 basis points from Wednesday. The fall was supported by hopes of the inclusion of Indian government bonds in Bloomberg's flagship Global Aggregate Index and due to buying by foreign portfolio investors, Informist reported earlier.
The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.15%, down 3-5 basis points from 7.18-7.20% Wednesday, while yields on NABARD's five-year bonds were 7.19-7.20%, down 3 bps from 7.22-7.23% Wednesday.
"There was muted activity only," a dealer at a private sector bank said. Market participants are trading cautiously as liquidity is going to decline due to outflows for payments of excise tax and tax demanded at source.
Mutual funds and insurance companies actively bought corporate bonds Thursday as is seen at the start of a month, dealers said. "First week of the month, there is buying pressure and during the last week there is selling pressure," the dealer at the private sector bank said.
Foreign banks are actively selling corporate bonds and investing in Indian government bonds, the dealer said. "Even for foreign banks who entered (bought papers) at 7.40-7.80%, it is wise for them to book profit at current levels," the dealer said. "Foreign players will exit corporate bonds...it is like a balancing activity," the dealer said about foreign portfolio investors buying government bonds.
FPIs have been actively purchasing Indian government securities over the potential inclusion of Indian government bonds in the Bloomberg index. "Now the main trigger point is the bond market," the dealer said about what market participants are tracking currently.
In the secondary market, deals aggregating to INR 198.05 billion were recorded on the National Stock Exchange and BSE combined, marginally up from INR 197.88 billion Wednesday. Papers issued by Small Industries Development Bank of India, Power Finance Corp., Bajaj Finance, Mahindra and Mahindra Financial Services, and REC were actively traded.
Bonds worth INR 26.45 billion were issued Thursday, up from INR 25.55 billion Wednesday. Poonawalla Fincorp raised INR 4.33 billion through bonds maturing in October 2028 at 8.0568%, dealers said.
On Friday, two public sector undertakings--NABARD and India Infrastructure Finance Co. Ltd.--will tap the market to raise funds. NABARD plans to raise up to INR 80 billion through the issuance of bonds maturing in December 2029. Traders expect the cut-off on NABARD bonds at 7.20-7.25%. IIFCL has sought bids for up to INR 20 billion through the issuance of bonds maturing in June 2031.
Bajaj Finance plans to raise up to INR 70 billion through the issuance of two bonds with different maturities. Aditya Birla Capital has sought bids for up to INR 6 billion through the reissue of the 8.0668%, April 2036 bonds, while Kotak Mahindra Prime will seek bids for INR 2.5 billion through the reissue of 7.97%, August 2029 bonds.
Friday, corporate bond yields will track the weekly auction of Indian government bonds, where the government will sell INR 340 billion of the 6.94%, 2036 bond.
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:
Tenure | Thursday | Wednesday |
Three-year | 7.15% | 7.18-7.20% |
Five-year | 7.19-7.20% | 7.22-7.23% |
10-year | -- | -- |
End
Edited by Akul Nishant Akhoury
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