Informist, Wednesday, Nov 29, 2023
By Sachi Pandey
MUMBAI – Despite a pick-up in trade volume in the secondary market, yields on corporate bonds remained flat across tenures today due to lack of firm domestic cues, dealers said.
"It is the month-end period, and then the event (monetary policy meeting) is there...it's always seen that before the event, the market is quiet," said the head of debt capital market at a brokerage firm.
Merchant banks were on the selling side and some insurance companies bought papers today, dealers said. Mutual funds were said to have been active on both sides.
Improved participation led to a surge in trade volumes, with deals aggregating 144.77 bln rupees being recorded on the National Stock Exchange and BSE combined as of 1500 IST, against 50.81 bln rupees on Tuesday.
Bonds issued by Andhra Pradesh Capital Region Development Authority, REC, HDFC Bank, Indiabulls Housing Finance, HDB Financial Services, Power Finance Corporation, National Bank for Agriculture and Rural Development, Andhra Pradesh State Beverages Corp, and Uttar Pradesh Power Corp were traded the most.
Yields on corporate bonds did not budge even after a fall of 12 basis points in the yield on the benchmark 10-year US Treasury note today. The yield fell to 4.29% from 4.41% at the close of the Indian market on Tuesday after US Federal Reserve Governor Christopher Waller indicated that the first cut in policy rate could be on the horizon if inflation remains lower for a few months.
"Only G-sec (government securities) moved because of the US treasury...everyone is now looking forward to RBI policy," said the debt capital market head quoted earlier.
The yield on the 10-year benchmark government bond ended at 7.25% today, against 7.28% on Tuesday, tracking the drop in yields on US Treasury notes.
Market participants are now waiting for the RBI's Monetary Policy Committee meeting, scheduled for Dec 6-8, to gauge the domestic policy rate trajectory.
Investors expressed concern about constrained liquidity in the banking system, which has led to a rise in yields on short-term bonds in the past few days. Liquidity in the banking system has been in deficit for most of 2023-24 (Apr-Mar).
"Whatever supply is there is also getting sold at par or below par (in the secondary market) due to tight liquidity," said a dealer at a mid-sized brokerage firm.
At the end of trade on Tuesday, liquidity in the banking system was in a deficit of 1.10 trln rupees, little changed from Monday, according to RBI data.
Bank of Baroda has invited bids on Thursday to raise up to 50 bln rupees through infrastructure bonds maturing in 10 years. The cut-off for the bond is expected to be in the range of 7.60-7.70%, dealers said.
Several companies and non-banking financial institutions are in talks with arrangers to tap the bond market in the coming days, merchant bankers said.
UDAY BONDS
In the secondary market, none of the Ujwal DISCOM Assurance Yojana bonds were traded today, according to data from the RBI's Negotiated Dealing System-Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | TUESDAY |
Three-year | 7.86-7.89% | 7.85-7.89% |
Five-year | 7.81-7.84% | 7.82-7.84% |
10-year | 7.72-7.74% | 7.72-7.74% |
End
Edited by Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. 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, Tuesday, Jan 2, 2024
By Sachi Pandey
MUMBAI – Yields on corporate bonds ended flat today due to lack of fresh domestic cues, dealers said. However, trade volumes in the secondary market rose as participation improved from Monday.
In the secondary market, some banks and insurance companies sold papers, while some pension fund houses bought, dealers said. Mutual fund houses were active on both the sides. Deals aggregating 107.50 bln rupees were recorded on the National Stock Exchange and BSE combined today, against 25.85 bln rupees on Monday.
"The activity was very limited today...the market is now tracking UST (US Treasury yields) and crude closely, and now that the SDL (state development loans) auction size has also come significantly higher than market expectations, we are seeing some pressure on spreads," said a fixed income fund manager at a big mutual fund house.
On Friday, the Reserve bank of India released the indicative state borrowing calendar, which showed states will borrow 4.13 trln rupees in Jan-Mar, far higher than market expectations of 3.4-3.5 trln rupees. Following the announcement, yields on government bonds rose slightly on Monday and so did yields on corporate bonds.
Today, six states raised 160 bln rupees through bonds. The cut-off yield on state loan bonds maturing in 10 years was at 7.74%, a spread of 53 basis points over the 10-year benchmark government bond. The spread widened by 4-5 basis points over a week.
Some market participants expect this widening in spreads on state loans to exert pressure on corporate bond yields, as issuers of corporate bonds will have to offer higher yields to make their bonds attractive for investors.
In the secondary market, papers issued by the National Bank for Agriculture and Rural Development, Housing & Urban Development Corp, Pipeline Infrastructure, REC, Small Industries Development Bank of India, and Kerala Infrastructure Investment Fund Board were traded across tenures today.
No bidding was scheduled in the primary market today. "The market participation is very limited because of the holidays, but it (primary issuances) will start slowly and steady in a couple of days," said the fixed income fund manager quoted earlier
On Wednesday, L&T Finance Holdings plans to raise up to 5 bln rupees through bonds maturing in three years. Shree Renuka Sugars has sought bids for its bonds maturing in five years to raise 2.85 bln rupees.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 130.6 mln rupees were traded at a weighted average yield of 7.7200-7.7458%, according to data from the RBI's Negotiated Dealing System-Order Matching System.
* 80.6 mln rupees of Haryana's 2024 bonds were traded at 7.7292-7.7458%
* 32 mln rupees of Tamil Nadu's 2031 bonds were traded at 7.7200%
* 18 mln rupees of Telangana's 2032 bonds were traded at 7.7200%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURE | TODAY | MONDAY |
Three-year | 7.79-7.81% | 7.78-7.80% |
Five-year | 7.74-7.76% | 7.73-7.75% |
10-year | 7.70-7.74% | 7.69-7.71% |
End
Edited by Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. 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 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
