Informist, Thursday, Mar 2, 2023
By Asmita Patil
MUMBAI – Yields on corporate bonds remained steady in the secondary market today as traders avoided large bets due to jitters surrounding a likely liquidity crunch in the coming days, dealers said.
“Systemic liquidity is seen drying up to a large extent in the coming days. Short-term rates have already gone up sharply, so people have to come to terms with the fact that rates are going to be this high at the short end for a long time. Activity has therefore dried up,” said a debt fund manager with a mid-sized mutual fund house.
Liquidity in the banking system is currently in a surplus of 671.46 bln rupees, up from 182.57 bln rupees on Wednesday due to inflows on account of the government’s month-end spending in the form of salaries and pension payouts.
However, the liquidity is expected to contract in coming days due to scheduled outflows on account of advance tax and good and services tax payments.
“…the next decisive thing is when VRRR (variable rate reverse repo) matures, whether the RBI does a reasonable size VRR,” said a dealer with a mid-sized primary dealership.
The Reserve Bank of India drained out 127.52 bln rupees through a 14-day variable rate reverse repo auction on Feb 24.
Participation in the secondary market was low. A few mutual fund houses, insurance companies, and pension funds were active, dealers said.
Bonds issued by Indian Railway Finance Corp, Can Fin Homes, India Grid Trust, National Bank for Agriculture and Rural Development, Power Finance Corp were traded the most across tenures.
In the primary market, PFC raised 34.69 bln rupees through 15-year bonds at a coupon of 7.82%.
On the other hand, Small Industries Development Bank of India withdrew its plan to raise up to 30 bln rupees through bonds maturing on Apr 10, 2026, due to high bid rates.
Today, deals aggregating 52.63 bln rupees were recorded on the National Stock Exchange, against 35.69 bln rupees on Wednesday. BSE clocked deals worth 32.69 bln rupees against 24.60 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Ujwal DISCOM Assurance Yojana bonds worth 102 mln rupees were traded at a weighted average yield of 7.7533-7.9027%, according to data from the RBI’s Negotiated Dealing System–Order Matching System.
* 65 mln rupees of Tamil Nadu’s 2024 bonds were traded at 7.8445-7.9027%
* 19 mln rupees of Haryana’s 2025 bonds were traded at 7.7533%
* 18 mln rupees of Telangana’s 2025 bonds were traded at 7.8695%
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Ashish Shirke
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