Informist, Monday, Mar 7, 2022
By Sanjana Raina
NEW DELHI – Yields on corporate bonds ended higher across tenures in the secondary market today, taking cues from the government bond market, dealers said.
Yields on government bonds shot up today as a surge in Brent crude oil price to a 14-year high of $139.13 per barrel raised concerns of imported inflation, which could put pressure on the Reserve Bank of India to wind up its monetary policy accommodation and move towards raising interest rates, dealers said.
The 10-year benchmark 6.54%, 2032 gilt settled at 97.53 rupees or 6.89% yield, the highest since Feb 3, against Friday’s closing level of 98.05 rupees or 6.81%.
Dealers are of the view that the continued rise in crude oil prices would start reflecting in India’s CPI inflation numbers starting in March.
Moreover, traders are wary that Brent crude price would stay above $100 per barrel for the rest of the year due to a persistent supply gap, even if it retreats from the 14-year high hit earlier in the day, dealers said.
Rise in consumer inflation may force the RBI’s Monetary Policy Committee to hike its policy rates sooner than earlier expected. Some traders are betting on a 25-basis point repo rate hike as early as June.
In the secondary market of corporate bonds, mainly traders were said to have sold papers while mutual funds and banks were on the buying side.
Papers issued by REC, ICICI Home Finance, Hindustan Petroleum Corp, Union Bank of India, Oil & Natural Gas Corp, NTPC, Power Finance Corp, UP Power Corp, LIC Housing Finance, National Bank for Agriculture and Rural Development, Bank of Baroda, State Bank of India and IIFL Finance were traded the most across maturities.
“All of this is on the back of very poor trading. There is a widening in the bid and ask of spreads as well. I don’t think that will change as far as corporate bonds are concerned,” said a fund manager with a mid-sized fund house.
In the primary market, Housing Development Finance Corp has invited bids on Tuesday to raise up to 100 bln rupees through non-convertible debentures maturing on Mar 10, 2032.
Today, deals aggregating 43.14 bln rupees were recorded on the National Stock Exchange, against 44.16 bln rupees on Friday. BSE recorded deals worth 22.56 bln rupees, compared with 29.61 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds aggregating 50.00 bln rupees were traded at a weighted average yield of 7.11-7.24%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.
* 10.00 mln rupees of Punjab’s 2030 bonds were traded at 7.24%
* 29.10 mln rupees of Uttar Pradesh’s 2028-31 bonds were traded at 7.11-7.24%
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Ashish Shirke
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Source: Cogencis