Informist, Wednesday, Nov 8, 2023
By Sachi Pandey
MUMBAI – Yields on corporate bonds ended steady in the secondary market today as investors refrained from placing aggressive bets due to lack of significant domestic cues, dealers said. Market participants now await Reliance Industries Ltd’s mega bond issue scheduled for bidding on Thursday.
RIL plans to raise up to 200 bln rupees through bonds maturing in 10 years. This would be the largest issue by a private manufacturing company in the corporate bond market.
“The RIL issue sounds like a tailor-made requirement. I don’t think it is Reliance’s requirement, it must be some buyers’ requirement,” said a debt fund manager at a mutual fund house.
RIL’s bond issue carries a partly paid structure, with helf the issue size to be paid on the allotment date and the rest on Dec 15, sources told Informist on Tuesday. The bonds will be redeemed in a staggered manner.
The coupon on RIL’s 10-year bonds is expected in the range of 7.70-7.80%, market participants said.
Apart from RIL’s hefty bond issue, LIC Housing Finance will tap the bond market to raise up to 15 bln rupees by reissuing bonds maturing on May 9, 2033. Chaitanya India Fin Credit plans to raise 850 mln rupees through two-year bonds, and UGRO Capital plans to raise 500 mln rupees through an issue of May 2025 bonds.
In the primary market today, Larsen & Toubro raised 20 bln rupees through bonds maturing in two years, at a fixed coupon of 7.66%, while Kotak Mahindra Prime raised 6 bln rupees through bonds maturing in three years at a fixed coupon of 8.09%. Both the bonds were fully subscribed.
HDB Financial Services set a yield of 8.15% on the re-issuance of its bonds maturing in August 2025, and accepted bids worth 5.2 bln rupees. Clix Capital Services raised 650 mln rupees through Nov 10, 2025, bonds at a fixed coupon of 10.20%, payable quarterly.
Participation in the secondary market of corporate bonds improved today, with domestic banks on the buying side and insurance companies and foreign investors selling, dealers said. Mutual fund houses were active on both sides. The improved participation led to a rise in trade volume, with deals aggregating 72.42 bln rupees recorded on the National Stock Exchange and BSE combined, compared with 59.45 bln rupees on Tuesday.
Papers issued by State Bank of India, Andhra Pradesh State Beverages Corp, National Bank for Agriculture and Rural Development, Navi Finserv, Uttar Pradesh Power Corp, Spandana Sphoorty Financial, and Anand Rathi Global Finance were traded the most across tenures today.
Activity in the secondary market of corporate bonds will be driven by global factors, including US Treasury yields and crude oil prices, said the deputy vice-president at a mid-sized mutual fund house.
US Treasury yields fell by 9 basis points to 4.58% on Tuesday as investors continue to price in the possibility that this is the peak of the US Federal Reserve’s rate hike cycle, though some US Fed officials have cautioned against such assumptions.
“I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation to 2% in a timely way,” US Fed Governor Michelle Bowman said on Tuesday, as reported by Reuters.
Minneapolis Fed President Neel Kashkari also said it was too early to declare victory over inflation, and that there might be more rate hikes to come.
On Tuesday, crude oil prices fell to their lowest since late July as weak economic data from across the globe, including China, instilled fear of a fall in demand.
UDAY BONDS
In the secondary market, Haryana’s Ujwal DISCOM Assurance Yojana 2026 bonds worth 100 mln rupees were traded at a weighted average yield of 7.5594%, according to data from the Reserve Bank of India’s Negotiated Dealing System-Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
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Edited by Avishek Dutta
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