Informist, Tuesday, Dec 7, 2021
By Aayushi Parekh and Subhana Shaikh
MUMBAI – Yields on corporate bonds were confined to a thin band in the secondary market today as most market participants avoided placing large bets ahead of the Reserve Bank of India’s monetary policy statement on Wednesday, dealers said.
The Monetary Policy Committee is likely to leave the repo rate unchanged at 4.00%, although a lift-off for the reverse repo rate is widely expected.
According to all 32 economists, treasurers, and mutual fund managers polled by Informist, the RBI’s rate-setting panel is not expected to make any change to the policy rate or the accommodative stance at the conclusion of its three-day meet, which began on Monday. However, half of the respondents see the reverse repo rate being increased by 15-40 basis points from its current level of 3.35%.
“Some market participants believe that a 10-15 bps reverse repo rate hike will be tomorrow’s (Wednesday) outcome, while some believe that the new-variant’s impact will result in a rate hike delay,” a dealer said.
The market is split on whether the central bank will be cautious in navigating through the risks that Omicron may pose to the economic growth by maintaining status quo on its monetary policy, or lay down a path for policy normalisation by hiking the reverse repo rate, dealers said.
While the impact of Omicron was seen to be milder than earlier feared, uncertainty over what the RBI’s decision will be remains high. This has come after an overnight jump in US Treasury yields and crude oil prices.
In the secondary market of corporate bonds today, mutual funds and banks were mainly said to have been the most active, however, in only small quantum.
“The trading in corporate bonds today was just enough to move overall levels to where they were last week…activity was seen in the three- and five-year segments,” the dealer added.
Papers issued by Housing Development Finance Corp, REC, National Bank For Agriculture And Rural Development, Canara Bank, Kotak Mahindra Prime, Tata Motors Finance, Power Finance Corp, Reliance Industries, Ess Kay Fincorp, Tata Capital Financial Services and Union Bank of India were traded the most across maturities today.
In the primary market today, Punjab National Bank raised up to 20 bln rupees through Basel-III-compliant tier-I bonds at a coupon of 8.40%. The issue was fully subscribed.
Today, deals aggregating 46.31 bln rupees were reported on the NSE against 33.37 bln rupees on Monday. The BSE recorded deals worth 31.07 bln rupees compared with 19.35 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Ujjwal DISCOM Assurance Yojana bonds aggregating 3.00 mln were traded at a weighted average yield of 5.14-5.24%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.
* 2.00 mln rupees of Haryana’s 2022 bonds were traded at 5.14%
* 1.00 mln rupees of Rajasthan’s 2022 bonds were traded at 5.24%
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Aditya Sakorkar
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Source: Cogencis
