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Informist, Monday, Aug. 17, 2026

 

By Nandini Sinha

 

MUMBAI – Yields on corporate bonds ended higher Monday, tracking the rise in the yields on Indian government bonds due to the premature closure of the Reserve Bank of India's concessional swap window for foreign currency non-resident (banks) deposits, dealers said. Yields on corporate bonds maturing up to three years rose around 6–8 basis points, a dealer at a brokerage said.

 

Mutual funds and banks were active participants. Pension funds and insurance companies offered quotes for long-term bonds, but deals did not materialise. 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.42-7.43%, up 7–8 bps from 7.35% Friday, while the indicative yield on NABARD's five-year bonds rose 7 bps to 7.45% from 7.38% Friday. The indicative yield on NABARD's 10-year bond was 7.50–7.55% from 7.50–7.52% Friday. The yield on the 10-year benchmark 6.94%, 2036 Indian government bond settled at 6.81% Monday, sharply up from 6.76% Friday. 

 

"We expected a rise in yields (due to the early closure of the FCNR (B) deposit window), but they (the rise in yields) were muted in the 2026–2027 segments," a dealer at a private sector bank said. "In the 2026–27 segments, there was not much movement due to liquidity coming in." The market must be expecting more FCNR (B) deposits over the next 15 days, with total deposits expected to reach around $80 billion, the private sector bank dealer said. 

 

The most likely reason for the early closure of the FCNR(B) window could be that the mobilisation target has already been achieved, with inflows worth $57 billion, according to a report by the State Bank of India. "And another $25-30 bn (billion) could easily flow in the remaining days of August, taking the total collections to around $85 bn (billion)."

 

Yields are rising in the three-year segment as it is actively traded. "Most people are depositing (through the FCNR (B) window) in the three-year deposits as it is a lock-in," the dealer said. Banks are buying bonds in this segment to manage asset-liability mismatches arising from the three-year FCNR(B) deposits.

In the secondary market, deals worth INR 87.41 billion were recorded on the National Stock Exchange and BSE combined, marginally down from INR 90.03 billion Friday. Papers issued by the Small Industries Development Bank of India, Nuvama Wealth Finance, REC, National Highways Authority of India, and GMR Hyderabad International Airport were traded actively Monday.

 

Bonds worth INR 29 billion were issued Monday. Bajaj Finance raised INR 5 billion by reissuing 7.79%, July 2036 bonds, dealers said. Investors subscribed only to the base size, while the company had planned to raise up to INR 20 billion, including the green shoe option of INR 15 billion.

 

Tuesday, companies are scheduled to tap the market to raise up to INR 15.10 billion. Sundaram Finance plans to raise INR 7.5 billion by reissuing 7.74%, July 2028 bonds, dealers said. Non-banking financial companies John Deere Financial India and Vivriti Capital will seek bids for INR 3 billion each by issuing bonds maturing in August 2029 and June 2032, respectively. Market participants expect corporate bond yields to remain broadly steady Tuesday, as the market has priced in inflows through FCNR (B) deposits.  

 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 7.00 million was traded Monday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 7.00 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 6.7996%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

Tenure	Monday	Friday
Three-year	7.42-7.43%	7.35%
Five-year	7.45	7.38%
10-year	7.50–7.55%	7.50-7.52%

 

End

 

Edited by Saji George Titus

 

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