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India Corporate Bonds: Yields flat, market eyes RBI policy next week

Informist, Friday, Dec 3, 2021

 

By Aayushi Parekh and Sanjana Raina

 

MUMBAI – Yields on corporate bonds ended flat today because market participants exercised caution ahead of the outcome of the Reserve Bank of India’s policy meeting on Wednesday, dealers said.

 

The general expectation of the market is a hike in reverse repo rate, which would lead to the corporate bond markets gearing up again after a fairly inactive period of trade and low supply, a dealer said.

 

However, there is uncertainty with regard to the monetary policy committee’s view due to the emergence of Omicron, the new strain of coronavirus. This development has brought in a fear across markets over possible restrictions on movement and activities.

 

India saw its first two cases of the new variant in Karnataka the health ministry confirmed in a press briefing on Thursday.

“The first Omicron variant case has been reported in India which is causing uncertainty among market participants on what stand the RBI will take in its meeting, which is why no one wants to trade away and risk the current position they are in,” a fund manager said.

 

“Corporate bond market participants expect an impact of this situation on the monetary policy committee’s decisions, especially one that might result in a delay of a rate hike”, a dealer with an insurance company said.

 

In the secondary market, papers issued by Housing Development Finance Corp, India Infradebt Ltd, India Railway Finance Corp, Virescent Renewable Energy Trust, National Bank For Agriculture And Rural Development, LIC Housing Finance, Bajaj Finance and HDFC Bank were traded the most across maturities today.

 

In the primary market, merchant bankers said that issuers that were lined up for the first week of December will continue with their issuances. However, most issuers will wait until after the policy meet to bring in a fresh supply of papers to the market.

 

On Tuesday, Punjab National Bank has invited bids for its Basel-III compliant additional tier-I bonds to raise up to 20 bln rupees.

 

Today, deals aggregating 41.84 bln rupees were reported on the NSE, against 34.34 bln rupees on Thursday. The BSE recorded deals worth 16.82 bln rupees compared with 25.25 bln rupees in the previous session.

 

UDAY BONDS

In the secondary market, Ujjwal DISCOM Assurance Yojana bonds aggregating 57.00 mln were traded at a weighted average yield of 6.91-6.67%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.

 

*47 mln rupees of Punjab’s 2030 bonds were traded at 6.91%

*10 mln rupees of Haryana’s 2025 bonds were traded at 6.67%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

TENURES

TODAY

THURSDAY

Three-year

5.40-5.42%5.40-5.42%

Five-year

5.65-5.70%5.65-5.70%

10-year

6.80-6.83%6.80-6.83%

 

End

 

Edited by Maheswaran Parameswaran

 

Cogencis news is now Informist. 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 Media Pvt. Ltd. 2021. All rights reserved.

Source: Cogencis

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