Informist, Wednesday, May 31, 2023
By Parth Singh
NEW DELHI – Yields on three-year corporate bonds rose in the secondary market today because of selling by banks, while yields on five- and 10-year papers were steady due to lack of domestic cues, dealers said.
Banks and traders were on the selling side, while mutual funds and public-sector undertakings were buying, dealers said.
“They are selling short and buying long because of reinvestment risk, since the yield curve is expected to steepen going forward,” a dealer with a mid-sized brokerage firm said.
Rising expectation that the Reserve Bank of India will hold its policy rate steady for a prolonged period has led to a positive sentiment across debt markets, dealers said. Hence, short-term yields are expected to fall further.
In April, in a surprise move, the RBI kept its repo rate unchanged at 6.50% in its policy review. This led to yields on bonds issued by National Bank for Agriculture and Rural Development, considered a benchmark in the corporate bond market, to fall 14-17 basis points across tenures during the month.
Today, volume in the market remained on the higher side. Deals aggregating 99 bln rupees were recorded on the National Stock Exchange and BSE combined as against 70 bln rupees on Tuesday.
Bonds issued by Housing Development Finance Corp, Edelweiss Asset Reconstruction Co, Indian Railway Finance Corp, Power Finance Corp, NABARD, Small Industries Development Bank of India, and National Housing Bank were traded the most across tenures.
In the primary market, HDFC raised 82.35 bln rupees through bonds maturing in two years at a coupon of 7.80%. Demand for this issue came mostly from mutual fund houses and private corporates, dealers said.
“As it was a 2-year paper, the issue was bound to attract mutual funds, since they are getting a AAA paper at a much better rate compared to PSUs,” a debt dealer said.
LIC Housing Finance raised 15 bln rupees by reissuing bonds maturing on May 16, 2028, at a yield of 7.68%. The issue was fully subscribed.
On Thursday, frequent-issuer NABARD has invited bids for bonds maturing on Nov 2, 2026. The state-owned company plans to raise up to 50 bln rupees through the issue.
Mindspace Business Parks Real Estate Investment Trust aims to borrow 5 bln rupees through sale of bonds maturing on Jun 30, 2026 at a coupon of 7.75%, and Shriram Finance plans to raise up to 2 bln rupees through reissuance of bonds maturing on Oct 18, 2032. Biddings for these offerings are scheduled on Thursday.
Market participants also kept an eye out for India’s GDP data for Jan-Mar, which was due after market hours today, dealers said.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 117.48 mln rupees were traded at a weighted average yield of 7.28-7.76%, according to data from the RBI’s Negotiated Dealing System-Order Matching System.
* 52.48 mln rupees of Haryana’s 2024–26 bonds were traded at 7.30-7.76%
* 32 mln rupees of Rajasthan’s 2026 bonds were traded at 7.28%
* 30 mln rupees of Uttar Pradesh’s 2031 bonds were traded at 7.40%
* 3 mln rupees of Telangana’s 2031 bonds were traded at 7.45%
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Ashish Shirke
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