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India Corporate Bonds:Ylds steady; mkt awaits Bharat Bond ETF issues

Informist, Tuesday, Dec 13, 2022


By Parth Singh


NEW DELHI – Yields on corporate bonds in the secondary market ended steady even as volume picked up as investors are waiting for a heavy supply of primary issuances under the Bharat Bond Exchange-Traded Fund on Wednesday, dealers said.


Market participants have made room for fresh issuances from state-owned entities under the Bharat Bond ETF and private entities that are set to raise up to 82.5 bln rupees cumulatively on Wednesday.


In the primary market, Power Finance Corp raised 4.7 bln rupees through bonds maturing on Apr 15, 2033 at a coupon of 7.58%, which was fully subscribed. The greenshoe amount was reserved for Bharat Bond ETF.


National Bank for Agriculture and Rural Development plans to raise up to 10 bln rupees through bonds maturing on Apr 15, 2033, and Hindustan Petroleum Corp Ltd aims to raise up to 7.5 bln rupees through bonds maturing on Apr 15, 2033.


NTPC and Indian Railway Finance Corp will also tap the market on Wednesday to raise up to 5 bln rupees each through bonds maturing on Apr 15, 2033. Both the issuances have a base size of 1.5 bln rupees and a greenshoe option of 3.5 bln rupees. Biddings for all four offerings are scheduled on Wednesday.


REC also aims to raise up to 5 bln rupees through bonds maturing on Mar 31, 2033, and has invited bids for the same on Wednesday. In all these state-owned issuances, the greenshoe amount is reserved for Bharat Bond ETF.


According to merchant bankers, other public sector companies such as Housing Urban and Development Corp and Nuclear Power Corp of India will also tap the primary market under the Bharat Bond ETF.


From the private sector, HDFC Bank plans to borrow up to 50 bln rupees through Basel-III-compliant tier-II bonds maturing in 10 years, and has invited bids for the same on Wednesday. Earlier this month, the private sector bank raised 150 bln rupees through tier-II bonds maturing in 10 years, at a coupon of 7.86%.


“Currently there is ample demand for these issuances in the market, so it is likely that all of them will be successful,” said a fund manager with a mid-sized brokerage firm. “Investors are also keeping an eye on US CPI, which is seen at 7.3%.”


Market participants also exercised caution ahead of US consumer price index data which is scheduled after market hours today, and outcome of the US Federal Reserve policy review on Wednesday, which may see the US central bank raise interest rates by 50 bps, dealers said.


In the secondary market, insurance companies and wealth management funds were mainly on the buying side, whereas banks and mutual funds were active on the selling side, dealers said.


Bonds issued by LIC Housing Finance, NABARD, L&T Finance, Punjab National Bank, Housing Development Finance Corp, Thane Creek Bridge Infrastructure, Reliance Industries, and SBI Cards and Payment Services were traded the most across tenures.


Volume in the secondary market remained on the higher side. Deals aggregating 50.5 bln rupees were recorded on the National Stock Exchange as against 33.15 bln rupees on Monday. BSE clocked deals worth 30.34 bln rupees against 20.15 bln rupees on Monday.



In the secondary market, Haryana’s 2026 Ujwal DISCOM Assurance Yojana bonds aggregating 240 mln rupees were traded at a weighted average yield of 7.36%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.















Edited by Ashish Shirke


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Source: Cogencis

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