Informist, Friday, Jul 9, 2021
By Subhana Shaikh
MUMBAI – After oscillating between gains and losses this week, yields on corporate bonds ended on a higher note across tenures in the secondary market today taking cues from the sharp rise in government bond yields, dealers said.
At open, yields on corporate bonds were down as investor sentiment had improved after Reserve Bank of India Governor Shaktikanta Das in an exclusive interview with Business Standard on Thursday, said that a hasty withdrawal of monetary policy support could negate economic gains.
However, yields shot up at the end of the day as offers slightly drifted upwards, dealers said.
Yields on government bonds surged today as a higher-than-expected coupon on the new 10-year 2031 bond indicated the central bank's comfort with higher yields, dealers said. Moreover, a rise in US Treasury yield and crude oil prices also weighed on the bond prices during the day.
The 10-year benchmark 5.85%, 2030 bond ended at 97.63 rupees, or 6.19% yield, against 98.06 rupees or 6.12% yield on Thursday. The new 10-year 6.10%, 2031 bond closed at 99.99 or 6.10% yield today.
The RBI set the coupon on the new 2031 bond at 6.10% at the weekly gilt auction today. The median of estimates by 15 bond dealers polled by Informist had pegged it at 6.08%.
"Today, I think the corporate bonds as far as the movement or the direction was concerned were mirroring the government bonds," a dealer said.
In the secondary market of corporate bonds, mainly traders were said to have sold papers while mutual funds and banks were on the buying side.
Papers issued by REC, ICICI Home Finance, Hindustan Petroleum Corp, Union Bank of India, Oil & Natural Gas Corp, NTPC, Power Finance Corp, UP Power Corp, LIC Housing Finance, National Bank for Agriculture and Rural Development, Bank of Baroda, State Bank of India and IIFL Finance were traded the most across maturities.
"All of this is on the back of very poor trading, hardly (any) trades in the market. There is a widening in the bid and ask of spreads as well. I don't think that will change as far as corporate bonds are concerned," a fund manager with a mid-sized fund house said.
Overall trade volume was low in the secondary market today. Deals aggregating 23.27 bln rupees were reported on the National Stock Exchange, against 35.90 bln rupees on Thursday. BSE recorded deals worth 27.93 bln rupees compared with 27.57 bln rupees the previous day.
Investors are now looking forward to the inflation numbers next week. "Inflation numbers are coming again and uncertainty or concerns around it have already been spilling into the markets even as we are closing today on Friday," the fund manager added.
According to merchant bankers, some bond issuances are likely to tap the primary market next week. While some issuances were slightly pushed back because of the higher levels, market participants said that there is a pipeline of corporate bond issuances that is around the corner.
Major public sector lenders are likely to tap the bond market with tier-I and tier-II bond issuances. Apart from State Bank of India and Canara Bank, private lenders such as HDFC Bank and Axis Bank are also looking to raise funds in the next few months through tier-I bonds.
State Bank of India may start with the sale of tier-I bonds, dealers said. In June, State Bank of India got the board's approval to raise up to 140 bln rupees through the sale of tier-I bonds in 2021-22 (Apr-Mar).
This has come at a time when some fund houses have turned risk-averse towards these papers.
Today, deals aggregating 23.28 bln rupees were reported on the National Stock Exchange, against 35.90 bln rupees on Thursday. BSE recorded deals worth 27.93 bln rupees compared with 27.57 bln rupees the previous day.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES | TODAY | THURSDAY |
Three-year | 5.27-5.33% | 5.26-5.27% |
Five-year | 5.80-5.90% | 5.80% |
10-year | 6.90-6.93% | 6.88-6.89% |
End
Edited by Maheswaran Parameswaran
Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
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Informist, Monday, Mar 7, 2022
By Sanjana Raina
NEW DELHI – Yields on corporate bonds ended higher across tenures in the secondary market today, taking cues from the government bond market, dealers said.
Yields on government bonds shot up today as a surge in Brent crude oil price to a 14-year high of $139.13 per barrel raised concerns of imported inflation, which could put pressure on the Reserve Bank of India to wind up its monetary policy accommodation and move towards raising interest rates, dealers said.
The 10-year benchmark 6.54%, 2032 gilt settled at 97.53 rupees or 6.89% yield, the highest since Feb 3, against Friday's closing level of 98.05 rupees or 6.81%.
Dealers are of the view that the continued rise in crude oil prices would start reflecting in India's CPI inflation numbers starting in March.
Moreover, traders are wary that Brent crude price would stay above $100 per barrel for the rest of the year due to a persistent supply gap, even if it retreats from the 14-year high hit earlier in the day, dealers said.
Rise in consumer inflation may force the RBI's Monetary Policy Committee to hike its policy rates sooner than earlier expected. Some traders are betting on a 25-basis point repo rate hike as early as June.
In the secondary market of corporate bonds, mainly traders were said to have sold papers while mutual funds and banks were on the buying side.
Papers issued by REC, ICICI Home Finance, Hindustan Petroleum Corp, Union Bank of India, Oil & Natural Gas Corp, NTPC, Power Finance Corp, UP Power Corp, LIC Housing Finance, National Bank for Agriculture and Rural Development, Bank of Baroda, State Bank of India and IIFL Finance were traded the most across maturities.
"All of this is on the back of very poor trading. There is a widening in the bid and ask of spreads as well. I don't think that will change as far as corporate bonds are concerned," said a fund manager with a mid-sized fund house.
In the primary market, Housing Development Finance Corp has invited bids on Tuesday to raise up to 100 bln rupees through non-convertible debentures maturing on Mar 10, 2032.
Today, deals aggregating 43.14 bln rupees were recorded on the National Stock Exchange, against 44.16 bln rupees on Friday. BSE recorded deals worth 22.56 bln rupees, compared with 29.61 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 50.00 bln rupees were traded at a weighted average yield of 7.11-7.24%, data from the RBI's Negotiated Dealing System – Order Matching System showed.
* 10.00 mln rupees of Punjab's 2030 bonds were traded at 7.24%
* 29.10 mln rupees of Uttar Pradesh's 2028-31 bonds were traded at 7.11-7.24%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES | TODAY | FRIDAY |
Three-year | 5.85-5.90% | 5.79-5.82% |
Five-year | 6.25-6.30% | 6.18-6.24% |
10-year | 7.14-7.18% | 7.10-7.13% |
End
Edited by Ashish Shirke
Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2022. All rights reserved.
