Informist, Friday, Jun 9, 2023
By Parth Singh
NEW DELHI – Yields on three-year corporate bonds rose in the secondary market today on concerns that rate cuts by the Reserve Bank of India might be further away from market expectations, dealers said. However, yields on five- and 10-year papers ended on a steady note. Yield on the 10-year note had risen tracking similar sentiment on Thursday.
In the secondary market of corporate bonds, mutual fund houses were on the buying side, while banks were selling, dealers said. Some banks were also said to be on the buying side.
"After the hawkish commentary by the RBI yesterday, market has basically understood that this will be a long pause and rate cutes are not going to happen as soon as it was expected," a senior fund manager at a mutual fund house said.
On Thursday, the central bank's Monetary Policy Committee kept the policy repo rate unchanged at 6.50% and decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.
"REC's higher than expected cut-off also put selling pressure on the investors. Market is expecting the yield curve to now reset," a senior debt dealer said.
In the primary market, REC Ltd raised 30 bln rupees through bonds maturing on Apr 30, 2026, at a coupon of 7.44%, in an issue which was fully subscribed. The state-owned company also borrowed 29.94 bln rupees via papers maturing on Jun 30, 2028, at 7.46% coupon.
According to merchant bankers, supply in the primary market is said to be robust including big-ticket issuances from private companies and public sector undertakings next week.
On Thursday, Informist reported that HDFC plans to hit the debt market with yet another massive bond offering worth up to 200 bln rupees, likely on Monday.
Bonds issued by Housing Development Finance Corp, REC, State Bank of India, Power Finance Corp, National Bank for Agriculture and Rural Development, and Adani Enterprises were traded the most across tenures.
Volumes in the market was lacklustre today. Deals aggregating 44 bln rupees were recorded on the National Stock Exchange and BSE combined as against 75 bln rupees on Thursday.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 772.7 mln rupees were traded at a weighted average yield of 7.40-7.48%, according to data from the RBI's Negotiated Dealing System-Order Matching System.
* 400.5 mln rupees of Haryana's 2025–26 bonds were traded at 7.40-7.47%
* 221.7 mln rupees of Rajasthan's 2025–26 bonds were traded at 7.40-7.47%
* 150.5 mln rupees of Uttar Pradesh's 2025–29 bonds were traded at 7.40-7.48%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES | TODAY | THURSDAY |
Three-year | 7.45-7.50% | 7.40-7.45% |
Five-year | 7.39-7.43% | 7.37-7.43% |
10-year | 7.38-7.43% | 7.37-7.43% |
End
Edited by Maheswaran Parameswaran
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