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Informist, Wednesday, Oct. 7, 2026

 

By Vaishali Tyagi 

 

MUMBAI – Yields on corporate bonds ended marginally higher on Wednesday after the Reserve Bank of India changed its monetary policy stance to 'calibrated tightening' from 'neutral', dealers said. However, the RBI Monetary Policy Committee's 25-basis-point repo rate hike had little impact on yields, as market participants had already priced it in, they said.

 

Initially, yields remained largely unfazed, rising by just one or two basis points. However, they rose further later in the day, tracking government bond yields, which hardened after the rate hike and stance change were announced, as well as a rise in Brent crude oil prices. 

 

"Nothing much changed in the corporate debt market apart from a slight upside movement in yields following gilts, that too after a while and not immediately... market had already priced in a 25 bps hike, therefore everything was on expected lines," a dealer at a state-owned bank said. "A 50 bps hike would have hit hard." He said traders will look for cues from the RBI MPC minutes and global developments for more clarity, which will likely guide the market going forward.

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.85-7.90%, marginally from 7.84-7.88% Tuesday, while the indicative yield on NABARD's five-year bonds was 7.92-7.94%, up from 7.85–7.90% Tuesday. The yield on the 10-year NABARD bond rose to 7.94% from 7.90% Tuesday. The yield on the 10-year benchmark 6.94%, 2036 bond ended at 7.2410%, up from 7.1928% Tuesday. The bond moved between 7.21% and 7.27% on Wednesday. This was the highest closing on the 10-year bond since Dec. 13, 2023.

 

Merchant bankers said traders who were on hold, awaiting the RBI's Monetary Policy Committee outcome, have started their book-building. "We do not expect too much activity immediately, but maybe in a week or so, activity will pick up as there is clarity now," a dealer at a brokerage firm said. 

 

In the secondary market, overall deals worth INR 96.41 billion were recorded on the National Stock Exchange and BSE combined, sharply down from INR 114.54 billion Tuesday. Papers issued by Power Finance Corp., Apex Homes, Sammaan Capital, Trust Investment Advisors, Godrej Finance, and Reliance Industries were traded actively. "Traders were on hold till half of the day and avoided large bets in order to assess the policy decision... now that things are much clearer, we expect secondary market trading activity to rise in coming days," the dealer at the brokerage said.

 

In the primary market, activity remained subdued in the days leading up to the RBI policy decision. After a sharp jump last week, issuances had slowed. Activity is now reviving, dealers said. With market participants expecting a rate hike at the December policy, issuers want to use the available window to meet capital requirements, as non-banking financial companies and banks are expected to see a pick-up in credit off-take during the festive season.

 

"We expect another hike of 25 bps in December. A worsening inflation outlook, while growth is holding up, has created the possibility of another rate hike. The RBI's move will be in line with other major global central banks that remain in the monetary tightening phase," Crisil said in a note. "The upward revisions to growth and inflation forecasts, the rate action and change in the monetary policy stance help align market expectations with evolving macroeconomic realities. The central bank is expected to remain committed to maintaining orderly liquidity and financial conditions as the festival season commences."

 

Issuances were INR 22.75 billion on Wednesday, marginally down from INR 25.95 billion on Tuesday. Piramal Finance raised INR 5.25 billion through a November 2029 bond issue at a pre-decided coupon of 8.62%. Edelweiss Asset Reconstruction Co. and JM Financial Home Loans also tapped the bond market to raise funds Wednesday.

 

On Thursday, issuances worth INR 24.40 billion are scheduled to hit the corporate bond market. Bajaj Finance will tap the market to raise up to INR 20 billion by reissuing 7.78%, November 2029 bonds, dealers said. Suryoday Small Finance Bank plans to raise INR 2 billion by issuing 10-year bonds at a fixed coupon of 10.05% per annum, payable semi-annually. Krazybee Services plans to raise INR 1.4 billion by issuing bonds maturing on Mar. 30, 2028.  

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Wednesday	Tuesday
Three-year	7.85-7.90%	7.84-7.88%
Five-year	7.92-7.94%	7.85-7.90%
10-year	7.94%	7.90%

 

UDAY BONDS

In the secondary market, four Ujwal DISCOM Assurance Yojana bonds worth INR 258.89 million were traded Wednesday, according to data on the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

 

* INR 144.00 million of Telangana's 8.08%, 2029 bond was dealt at 7.3217%

* INR 107.00 million of Tamil Nadu's 8.04%, 2029 bond was dealt at 7.4078%

* INR 5.89 million of Madhya Pradesh's 8.05%, 2029 bond was dealt at 7.3236%

* INR 2.00 million of Tamil Nadu's 7.77%, 2029 bond was dealt at 7.3435%

 

End

 

With inputs from Nandini Sinha

Edited by Saji George Titus

 

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