Informist, Thursday, Sep 21, 2023
By Subhana Shaikh
MUMBAI – Yields on corporate bonds ended a volatile session on a largely steady note amid low trading volumes as investors awaited firm cues ahead of fresh primary market supply on Friday, dealers said.
Corporate bonds rose slightly at the open, tracking the rise in US Treasury yields. However, towards the close, investors unwound positions following a similar movement in government securities on hopes that Indian government bonds will be included in global indices, dealers said.
US yields surged as the Federal Open Market Committee kept its policy rate unchanged at 5.25-5.50%, but Federal Reserve officials projected another rate hike by the end of 2023, with the guidance that they weren’t done with rate hikes this year.
According to the median of projections by them, the policy rate, unchanged since June, is seen at 5.50-5.75% at the end of the year.
Projections by Federal Reserve officials also indicated that interest rates may remain higher for a longer period in the world’s largest economy, as they revised their fund target range projection for next year. The officials now expect the federal fund target rate at 5.00-5.25% by the end of 2024, 50 basis points higher than forecast in the June policy review.
“Corporate bond yields ended more or less at the same level as yesterday,” a dealer with a mid-sized brokerage said. “After 1500 IST, there was some action in the market with major activity from mutual funds.”
Today, mutual funds and pension funds were said to have been mainly active in the secondary market for corporate bonds. According to dealers, mutual funds sold short-term assets such as commercial papers to add fresh positions and durations to their portfolios.
Papers issued by Vivriti Capital, Bank of India, Andhra Pradesh State Beverages Corp, Power Finance Corp, Indiabulls Housing Finance, National Bank for Agriculture and Rural Development, Navi Finserv, Uttar Pradesh Power Corp, and India Infrastructure Finance Co were traded the most across tenures today.
The country’s largest lender, State Bank of India, is seeking bids for its 15-year infrastructure bonds on Friday. The state-owned bank plans to raise up to 100 bln rupees through this issue. Market participants see the bond’s coupon in the range of 7.50-7.56%.
Today, Informist exclusively reported that ICICI Bank plans to raise up to 40 bln rupees next week through infrastructure bonds maturing in seven years.
Deals aggregating to 51.83 bln rupees were recorded today on the National Stock Exchange and BSE combined, as compared with 49.98 bln rupees on Wednesday.
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 12.63 bln rupees were traded at a weighted average yield of 7.2689-7.4878%, according to data from the Reserve Bank of India’s Negotiated Dealing System-Order Matching System.
* 500 mln rupees of Jharkhand’s 2026 bonds were traded at 7.4579%
* 700 mln rupees of Rajasthan’s 2025 bonds were traded at 7.516-7.4878%
* 40 mln rupees of Uttar Pradesh’s 2025 bonds were traded at 7.2689%
* 17.5 mln rupees of Telangana’s 2031 bonds were traded at 7.4403%
* 6.16 mln rupees of Haryana’s 2024 bonds were traded at 7.4285%
BENCHMARK LEVELS FOR CORPORATE BONDS:
Edited by Rajeev Pai
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