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Wednesday, September 28, 2022

India Corporate Bonds: Yields in thin range, mkt awaits fresh supply

Informist, Thursday, Jul 7, 2022

 

By Bhakti Tambe

 

MUMBAI – Yields on corporate bonds across maturities in the secondary market moved in a thin range today due to limited investor participation, as most market participants await fresh supply of corporate bonds before the Reserve Bank of India’s policy meeting in August, dealers said. 

 

“Currently, there’s high demand, low supply scenario in the corporate bond market. While the demand is high, it’s not resulting in the yields because there are limited options for investors even in the secondary market,” said a fund manager with a mid-sized mutual fund. 

 

“As more issuers tap the market with fresh, we will get clarity on actual yields and fundraising costs. The ones who come with bond issues early will have some pricing advantage,” the fund manager added.

 

Market participants expect bond issuances by banks in the coming weeks. On Monday, Punjab National Bank raised 20 bln rupees through tier-I bonds at a coupon of 8.75%, the first such issuance by any state-owned lender this financial year. Other lenders are likely to follow suit.

 

Informist today exclusively reported, quoting sources, that State Bank of India is likely to issue green Basel-III compliant tier-I bonds in the domestic market this month, the first of its kind by the country’s largest state-owned lender.

 

Green bonds are fixed-income debt instruments used to fund projects with positive environmental or climate benefits. Globally, several companies and banks tap the bond market to raise funds through green bonds.

 

In the secondary market today, bonds issued by banks such as SBI, Indian Bank, Bank of Baroda, Union Bank of India and South Indian Bank were traded.

 

“Today, at the shorter end, Bajaj Finance, HDFC (Housing Development Finance Corp), Muthoot Finance, L&T Finance, REC and PFC (Power Finance Corp) bonds were in demand from mutual funds. Some fund houses, and banks were seen selling these bonds,” a dealer with a Mumbai-based brokerage firm said. 

 

Among papers issued by corporates, Ramco Cements, Aditya Birla Fashion and Retail, Sikka Ports and Terminals and Mahanagar Telephone Nigam were traded though in small quantum.

 

Today, deals aggregating 40.2 bln rupees were recorded on the National Stock Exchange, against 49.10 bln rupees on Wednesday. Meanwhile, BSE clocked deals worth 34.1 bln rupees, compared with 32.35 bln rupees the previous day.

 

UDAY BONDS

In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 347.16 mln rupees were traded at a weighted average yield of 6.30-8.05%, data from Reserve Bank of India’s Negotiated Dealing System – Order Matching System showed.

 

* 253.11 mln rupees of Rajasthan’s 2023-2025 bonds were traded at 6.30-7.95%

* 86.55 mln rupees of Haryana’s 2025 bonds were traded at 7.30-7.38%

* 6 mln rupees of Bihar’s 2025 bonds were traded at 8.05%

* 1.50 mln rupees of Jammu and Kashmir’s 2026 bonds were traded at 8.05%

 

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

TENURES

TODAY

WEDNESDAY

Three-year

7.15-7.18%7.15-7.20%

Five-year

7.41-7.43%7.43-7.45%

10-year

7.57-7.60%7.60-7.65%

 

End

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. 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. 2022. All rights reserved.

Source: Cogencis

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