Informist, Friday, Dec 17, 2021
By Aayushi Parekh and Sanjana Raina
MUMBAI – Yields on corporate bonds across maturities ended 3-5 basis points higher in the secondary market today, taking cues from a rise in government bond yields, dealers said.
Today, the 6.10%, 2031 bond ended at 97.80 rupees or 6.41% yield, against 98.05 rupees or 6.37% yield on Thursday. The benchmark yield closed at the highest level since Apr 16, 2020. The rise in gilt yields was because the Reserve Bank of India set a lower-than-expected cutoff price for dated securities at the 240-bln-rupee weekly gilt auction today, dealers said.
Traders demanded higher yields at the auction of the benchmark gilt in what is expected to be its last auction. They also avoided stocking up on gilts due to the uncertain environment for rates globally after Bank of England on Thursday unexpectedly raised benchmark interest rate at its policy review, dealers said.
In the secondary market of the corporate bond, papers issued by LIC Housing Finance, India Infradebt Ltd, State Bank of India, Indian Railway Finance Corp, Shriram Transport Finance Co, Small Industries Development Bank of India, REC, National Bank For Agriculture And Rural Development and Housing Development Finance Corp Ltd were traded the most across maturities today.
Mutual funds were seen on the selling side of the shorter-end today, with banks being active on both sides–selling and buying. Meanwhile, insurance companies were largely active on both sides for the longe -end of the market, dealers said.
“The other reason why corporate bonds yields were seen ending on a higher note today can be owed to the influx of primary issuances this week, and the ones that are set to come next week too,” a dealer said.
In the primary market today, Union Bank of India set a coupon of 8.40% on its Basel-III compliant tier-I 15-bln-rupee bonds, which were fully subscribed.
Separately, Indian Railway Finance Corp and Power Finance Corp’s 11.8-bln-rupee bond issues maturing in April 2032 were both fully subscribed at 6.87% and 6.92%, respectively. The greenshoe amount of 8.8 bln rupees each for both issues is reserved for Bharat Bond Exchange-Traded Funds.
Next week, bond issuances worth up to 61.8 bln rupees are lined up so far.
National Highways Authority of India has sought bids on Monday to raise up to 11.8 bln rupees through bonds maturing in April 2032, with the greenshoe amount to be reserved for Bharat Bond Exchange-Traded Funds.
Additionally, Axis Bank is looking to issue infrastructure bonds maturing in 10 year and is looking to accept bids aggregating up to 50 bln rupees, at a fixed coupon of 6.99%.
Today, deals aggregating 39.12 bln rupees were reported on the National Stock Exchange, against 42.70 bln rupees on Thursday. BSE recorded deals worth 23.83 bln rupees, compared with 23.98 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Ujjwal DISCOM Assurance Yojana bonds aggregating 37.60 mln rupees were traded at a weighted average yield of 6.68-6.81%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.
* 35.60 mln rupees of Rajasthan’s 2026 bonds were traded at 6.68%
* 2.00 mln rupees of Tamil Nadu’s 2027 bonds were traded at 6.81%
BENCHMARK LEVELS FOR CORPORATE BONDS:
TENURES
TODAY
THURSDAY
Three-year
5.43-5.45%5.40-5.42%
Five-year
5.70-5.72%5.67-5.71%
10-year
6.80-6.85%6.75-6.80%
End
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.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2021. All rights reserved.
Source: Cogencis