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Informist, Thursday, Aug. 27, 2026

 

By Nandini Sinha

 

MUMBAI – Yields on short-term corporate bonds ended higher Thursday, tracking the rise in yields on Indian government bonds, dealers said. Continued uncertainty over the US-Iran war also weighed on investor sentiment, dealers said. Mutual funds and banks were active participants in the secondary market, with paper maturing in up to five years being actively traded. Yields also rose due to selling pressure from mutual funds.

 

"Levels (yields on corporate bonds Thursday) were almost the same as Tuesday in the morning. Suddenly, levels rose after 3 PM (1500 IST) tracking gilts (Indian government bonds)," a dealer at a state-owned bank said. Yields on Indian government bonds rose on selling as traders made space in their portfolios ahead of the weekly gilt auction Friday. An intraday rise in Brent crude oil prices also weighed on yields on Indian government and corporate bonds.

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.63–7.65% against 7.60–7.65% Tuesday, while the indicative yield on NABARD's five-year bonds was 7.65-7.68%, up from 7.60–7.65% Tuesday. Money markets were shut Wednesday for Id-e-Milad. The yield on the 10-year benchmark 6.94%, 2036 Indian government bond settled at 6.89%, up 4 basis points from 6.85% Tuesday.

 

In the secondary market, deals worth INR 60.53 billion were recorded on the National Stock Exchange and BSE combined at 1500 IST, nearly doubling from INR 33.56 billion at the same time Tuesday. Paper issued by Indian Railway Finance Corp, HDB Financial Services, Small Industries Development Bank of India, Equinox India Infraestate, and REC were traded actively.

 

Insurance companies and pension funds are expected to have actively participated in the bidding for REC's October 2036 paper in the primary market Thursday, a dealer at a state-owned bank said. Banks are not actively trading in longer tenors as they want to avoid mark-to-market losses, the dealer said.

 

"There is demand from banks for three-year papers for ALM (asset and liability management). NABARD's July 2029 bonds are the perfect pick for banks to manage their ALM for FCNR (foreign currency non-resident banks) deposits," a dealer at a private-sector bank said about secondary market trade. 

 

Bonds worth INR 75.49 billion were issued Thursday, with REC being the biggest issuer. The state-owned company raised INR 25.02 billion through bonds maturing in October 2036, with the coupon set at 7.57%. However, the company scrapped the issuance of bonds maturing in October 2028 as investors demanded a higher coupon, dealers said. The power-sector financier had planned to raise up to INR 30 billion through each of the two bonds.

 

Participants will tap the corporate bond market to raise up to INR 21 billion Friday. Jio Credit will seek bids for up to INR 20 billion through the issuance of three-year bonds at a fixed coupon of 8.08%, payable annually, dealers said. Vastu Housing Finance Corp. will seek to raise INR 1 billion through the issuance of four-year bonds at a fixed coupon of 7.65%, payable quarterly.

 

UDAY BONDS

In the secondary market, one Ujwal DISCOM Assurance Yojana bond worth INR 3.60 million was traded Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching System.

 

* INR 3.60 million of Tamil Nadu's 8.24%, 2028 bond was dealt at 7.2504%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

Tenure	Thursday	Tuesday
Three-year	7.63–7.65%	7.60-7.65%
Five-year	7.65-7.68%	7.60-7.65%
10-year	--	--

 

End

 

Edited by Rajeev Pai

 

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