Informist, Monday, Feb 5, 2024
By Sachi Pandey
MUMBAI – After dropping 11-12 basis points last week, yields on corporate bonds ended steady across tenures today due to lack of major activity in the secondary market, dealers said. Only a few mutual fund houses and insurance companies were active today.
The subdued participation kept trade volumes low, with deals aggregating to 90.14 bln rupees recorded on the National Stock Exchange and BSE combined, against 138.94 bln rupees in the previous session.
Papers issued by National Bank for Agriculture and Rural Development, Punjab National Bank, Power Finance Corp, REC, Reliance Industries, HDFC Bank, State Bank of India, Cholamandalam Investment and Finance Co, and Muthoot Finance were traded the most on exchanges today.
“After the US Fed’s comments, G-sec (government securities) levels were up, but in the corporate bond market, there were offers on the lower side, but bids were on the higher side, so not many trades happened,” said the senior vice-president-fixed income at a large mutual fund house.
Yields on government bonds rose today, tracking a surge in US Treasury yields. Yields on 10-year benchmark US Treasury notes rose to 4.08% from 3.88% at the time Indian markets closed on Friday after US non-farm payrolls data showed an addition of 353,000 jobs in the US in January. The US non-farm payrolls data was almost double the estimate of 180,000 in a Reuters poll.
US Federal Reserve Chair Jerome Powell on Sunday reiterated that a rate cut in March was unlikely. “We have said that we want to be more confident that inflation is moving down to 2%…It’s not likely that this committee (Federal Open Market Committee) will reach that level of confidence in time for the March meeting,” Powell said in an interview with CBS News.
The yield on the 10-year benchmark government bond rose to 7.09% today from 7.06% on Friday. Caution prevailed ahead of the Reserve Bank of India’s Monetary Policy Committee meeting scheduled to start on Tuesday, dealers said.
“Policy should be a non-event, but the market will keep an eye on what the governor has to say on liquidity because going by what the RBI is doing by getting short-term VRRR (variable rate reverse repo), the intent is evident that the RBI doesn’t want the market liquidity to get positive,” a fixed income dealer at a small cooperative bank said. On Sunday, the liquidity deficit in the banking system was at 1.10 trln rupees as compared to 1.25 trln rupees on Saturday, according to RBI data.
In the primary market, LIC Housing Finance set a coupon of 7.69% on its bonds maturing in 10 years and accepted bids aggregating to 13 bln rupees. Ahmedabad Municipal Corp raised 2 bln rupees through its unsecured green bonds maturing in five years and set a coupon of 7.9% payable semi-annually. “I think the levels were quite aggressive for the issue, and mainly the aggressive bids were from banks,” said the fixed income senior vice-president quoted earlier.
Poonawalla Fincorp has invited bids on Tuesday for two bond issuances of different maturities and plans to raise up to 5 bln rupees. Primary market issuances are expected to pick up as banks, private companies, non-banking financial companies and municipal corporations start lining up issuances to complete their borrowing targets, merchant bankers said.
UDAY BONDS
In the secondary market, Rajasthan’s Ujwal DISCOM Assurance Yojana bonds worth 10 mln rupees, maturing in March 2025, were traded at a weighted average yield of 7.7965%, according to data from the RBI’s Negotiated Dealing System-Order Matching System.
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Avishek Dutta
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