Informist, Wednesday, Oct 18, 2023
By Asmita Patil
MUMBAI – Despite greater participation, yields on corporate bonds remained steady in the secondary market today, for the fifth session in a row, due to lack of major triggers, dealers said.
Participation improved slightly, with mutual fund houses and corporates on the buying side and insurance companies and private banks selling. However, overall trade volume remained subdued, with deals worth 60.33 bln rupees recorded on the National Stock Exchange and BSE combined.
Bonds of Larsen and Toubro, HDFC Bank, LIC Housing Finance, National Bank for Agriculture and Rural Development, Kotak Mahindra Prime, and Power Grid Corp of India were traded the most across tenures today.
“It’s a very quiet market, nothing much to do in the corporate bond market…thanks to your G-sec (government bonds),” a senior official with a mid-sized mutual fund house said. “G-sec is not doing good, so activity remains to be sideways as far as secondary volume (in the corporate bond market) is concerned.”
A surge in the yield on the 10-year benchmark US Treasury note and crude oil prices weighed on government bonds today, with yields on the 10-year benchmark government bond moving up slightly to end at 7.35%.
The ongoing war in West Asia has hit global market sentiment, leading to a rise in prices of crude oil. Brent crude oil futures for December delivery touched the day’s high of $93 per barrel, compared to $89.95 a bbl at the time of the Indian market close on Tuesday.
Even though the rise in crude oil prices is not expected to be passed on to retail consumers, domestic market participants remain on the edge amid fear of imported inflation.
In the US, the yield on the benchmark 10-year US Treasury note rose to 4.84% from 4.76% at the time of the Indian market close on Tuesday. US Treasury yields surged after data showed higher-than-expected retail sales in September, indicating “yet-resilient” economic conditions in the US.
“…with this war premium, and this so-called impact (of the Israel war) you should not try to be too adventurous…I know most of the traders in the market are running 30% of their limits,” said a deputy head of fixed income at a mid-sized mutual fund house.
Corporate bond market participants are longing for a pick-up in activity in the domestic primary market, which could provide some direction to the activity in the secondary market.
Today, HDB Financial Services Ltd raised 13.23 bln rupees through the reissuance of two bonds with different maturities and Bajaj Housing Finance raised 5 bln rupees through reissuance of bonds maturing on Sep 1, 2028, at a yield of 7.95%.
Tata Capital Financial Services has invited bids on Thursday to raise up to 6.6 bln rupees through bonds maturing on Oct 20, 2028.
“…right now, supply pressure is not there much…issuers are also not putting any pressure by giving cut-off at higher yield, which gives comfort to secondary market players,” a trader at a large private sector bank said.
With uncertainty looming on the global front, most market participants say yields on corporate bonds will remain range-bound.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 15.56 mln rupees were traded at a weighted average yield of 7.2627-7.7865%, according to data from the Reserve Bank of India’s Negotiated Dealing System-Order Matching System.
* 10 mln rupees of Haryana’s 2026 bonds were traded at 7.6697-7.7820%
* 2 mln rupees of Telangana’s 2024 bonds were traded at 7.2627%
* 1.30 mln rupees of Punjab’s bonds were traded at 7.7135%,
* 1.26 mln rupees of UP’s bonds were traded at 7.7865%
* 1 mln rupees of Jharkhand bonds were traded at 7.7135%
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Avishek Dutta
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