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India Corporate Bonds: Ylds in thin band; HDFC 10-year bond eyed Tue

Informist, Monday, May 23, 2022

 

By Subhana Shaikh

MUMBAI – Yields on corporate bonds were confined to a narrow range amid low trade volumes in the secondary market today because Reserve Bank of India Governor Shaktikanta Das’ comments in an interview were perceived to be on expected lines, dealers said.

 

The central bank is planning to increase interest rates over the next few policy meetings but the expectation of the repo rate being raised to its pre-pandemic level of 5.15% may not be accurate, RBI Governor Shaktikanta Das said.

 

“Broadly you are right to the extent that RBI wants to raise rates in the next few meetings, or in the next meeting at least,” Das told CNBC-TV18 in an interview today.

 

According to the minutes of the Monetary Policy Committee’s latest meeting, RBI Deputy Governor Michael Patra had advocated a reversal of the extraordinary accommodation provided during the COVID-19 pandemic, to reach a stage of neutral accommodation. This had led to the expectation that the central bank would raise the benchmark policy rate by a cumulative basis points to 5.15% in the near term.

 

“After Das’ interview, yields remained range bound as people have already started pricing in the likely rate hikes. There were barely any volumes and minimal participation was seen,” a dealer with a mid-sized brokerage firm said.

 

Mainly mutual funds and a few traders were said to have been active in the secondary market of corporate bonds. Bonds issued by Power Finance Corp, Housing Development Finance Corp, Bharat Petroleum Corp, Indian Railway Finance Corp, UP Power Corp, DME Development, National Bank for Agriculture and Rural Development, Coastal Gujarat Power and State Bank of India were traded the most.

 

According to merchant bankers, some frequent issuers are likely to tap the primary market this week. Housing Development Finance Corp has invited bids on Tuesday for its bonds maturing in 10 years. The housing financier plans to raise up to 120 bln rupees through this issue.

 

Today, deals aggregating 26.46 bln rupees were recorded on the National Stock Exchange, compared with 35.16 bln rupees on Friday. BSE clocked deals worth 8.97 bln rupees, compared with 21.54 bln rupees the previous day.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 602 mln rupees were traded at a weighted average yield of 7.69-7.84%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.

 

* 600 mln rupees of Uttar Pradesh’s 2031 bonds were traded at 7.69%

* 2 mln rupees of Rajasthan’s 2026 bond were traded at 7.84%

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

TENURES

TODAY

FRIDAY

Three-year

7.15-7.20%7.18-7.20%

Five-year

7.30-7.35%7.30-7.35%

10-year

7.70-7.73%7.70-7.75%

 

Edited by Avishek Dutta

 

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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Source: Cogencis

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