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By Nandini Sinha

 

MUMBAI – Yields on corporate bonds were range-bound Tuesday, tracking the yields on Indian government bonds, which fell owing to a fall in Brent crude oil price, dealers said. News reports of a statement by Pakistan claiming progress in talks with Iran also had an impact on the yields. The secondary market saw mixed participation, with paper maturing in 2029 being actively traded.

 

"It (yields on corporate bonds) was flattish at open, then news came on Pakistan's statement after which levels got better by 2 bps (basis points) tracking G-secs (Indian government securities)," a dealer at a public-sector bank said.

 

However, a fall in the overnight indexed swap rates did not have much impact on corporate bond yields, a dealer at another state-owned bank said. The one-year swap rate closed at 5.86% Tuesday, against 5.92% Monday, while the five-year swap rate closed at 6.35% Tuesday against 6.45% the previous day.

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.60–7.65% against 7.62–7.63% Monday, while the indicative yield on NABARD's five-year bonds was 7.60–7.65% against 7.60–7.64% Monday. 

 

The yield on the 10-year benchmark 6.94%, 2036 Indian government bond settled at 6.85%, down from 6.87% Monday. At 1700 IST, the Brent crude oil futures contract for October delivery was at $89.67 per barrel, down from $92.54 a barrel at the same time Monday.

 

"They (market participants) are still not sure. They are waiting for more clarity (on the US-Iran war). Maybe its (fall in swap rates) impact (on corporate bond yields) will be seen on Thursday," the dealer said. Money markets are shut Wednesday for Id-e-Milad.

 

The Pakistani military Tuesday said significant progress has been made in talks with Iran over ending the war with the US. Pakistan Army chief Field Marshal Asim Munir attended the latest round of talks in Tehran, accompanied by Pakistan's Interior Minister Mohsin Naqvi. "Comprehensive discussions focused on measures to prevent further escalation, reopening of the Strait of Hormuz, and expedited termination of the conflict," the Pakistani military said in a statement.

 

"Significant progress was made, and the meeting concluded on a highly positive note. We remain hopeful that this momentum will help pave the way for further progress and lasting peace in the region," Naqvi said in a post on X. "Our discussion focused on the Iran-US conflict, tensions in the Middle East and the way forward, as well as the steps needed by both sides for restoration of the Islamabad MoU (Memorandum of Understanding) thereby leading to comprehensive settlement of the conflict."

 

In the secondary market, deals worth INR 88.18 billion were recorded on the National Stock Exchange and BSE combined Tuesday, sharply down from INR 107.51 billion Monday. Paper issued by the Small Industries Development Bank of India, NABARD, Tata Capital Housing Finance, Kisetsu Saison Finance (India), and Tata Power Renewable Energy were traded actively.

 

Market participants will seek to raise up to INR 4.03 billion Wednesday and up to INR 69.54 billion Thursday in the primary market. Wednesday, Edelweiss Asset Reconstruction Co. Ltd. plans to raise INR 2 billion through the issuance of three-year bonds while Satin Finserv will seek bids for up to INR 1 billion through the issuance of bonds maturing in November 2028.

 

REC Ltd. will seek bids to raise up to INR 60 billion Thursday through the issuance of two bonds with different maturities. The power-sector financier plans to raise up to INR 30 billion through the issuance of bonds maturing on Oct. 31, 2028. The state-owned company also plans to raise up to INR 30 billion through the issuance of bonds maturing on Oct. 31, 2036. Both issuances have a base size of INR 5 billion and a greenshoe option of INR 25 billion.

 

The cut-off on REC's October 2036 bonds is expected to be between 7.55% and 7.65%, according to market participants. The dealer quoted in the first instance said there is strong demand from insurance companies and provident funds for long-tenor papers, while the dealer at the second bank said issuers are floating long-term paper to manage their asset-liability mismatch.

 

Maple Infrastructure Trust will seek bids for INR 7 billion through the issuance of bonds maturing in March 2041 while Toyota Financial Services India will tap the market to raise INR 1.99 billion through a reissue of its 8.20%, July 2029 bonds.

 

UDAY BONDS

In the secondary market, six Ujwal DISCOM Assurance Yojana bonds worth INR 26.10 million were traded Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 8.00 million of Telangana's 8.27%, 2028 bond was dealt at 7.6319%

* INR 6.00 million of Tamil Nadu's 8.05%, 2031 bond was dealt at 7.7309%

* INR 5.50 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 7.4413%

* INR 3.60 million of Tamil Nadu's 8.24%, 2028 bond was dealt at 7.6486%

* INR 1.50 million of Madhya Pradesh's 7.93%, 2032 bond was dealt at 7.7395%

* INR 1.50 million of Telangana's 8.04%, 2031 bond was dealt at 7.7357%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

Tenure	Tuesday	Monday
Three-year	7.60-7.65%	7.62–7.63%
Five-year	7.60-7.65%	7.60-7.64%
10-year	--	--

 

End

 

Edited by Rajeev Pai

 

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