Informist, Thursday, Dec 16, 2021
By Aayushi Parekh and Sanjana Raina
MUMBAI – Yields on corporate bonds moved in a narrow range today as a heavy pipeline of primary issuances deterred most investors from placing fresh bets in the secondary market, dealers said.
As has been the case for the last few trading days, market participation was limited to select mutual funds, banks, pension funds and insurance companies.
“In the three- to five-year segment, mutual funds were seen on the selling side while banks were on the buying side, as part of usual requirement-based trading,” a dealer said.
Yields in the three-month to one-year segment of corporate bonds rose as pressure on lenders to meet funding requirement remained high post advance tax outflows, a dealer said.
Rates on short-term debt papers have increased because of low demand from mutual funds amid narrowing of the liquidity surplus, dealers said. Liquidity in the banking system is estimated to be in a surplus of over 7.80 trln rupees as against 8.23 trln rupees on Wednesday. The surplus is expected to narrow further in the coming days due to outflows of 1.2-1.5 trln rupees as advance tax payments for Oct-Dec, between Wednesday and today.
Today, bonds by many borrowers, including big-ticket ones such as NTPC Ltd, NLC India, Mahindra and Mahindra Financial Services and ICICI Bank, were lined up for sale.
NTPC Ltd’s 11.75-bln-rupee bond issue was set at a coupon of 6.74% and was fully subscribed. NLC India also saw its 5-bln-rupee bond issue fully subscribed, and set a coupon of 6.85%. Both the papers mature in April 2032.
Separately, ICICI Bank issued infrastructure bonds maturing in 10 years and had its issue fully subscribed after raising 50 bln rupees at a pre-set coupon of 6.96%.
Mahnidra and Mahindra Financial Services raised 2.75 bln rupees at a yield of 7.45% on its reissue of 7.45%, November 2031 bonds.
In the secondary market, papers issued by LIC Housing Finance, State Bank of India, National Bank for Agriculture and Rural Development, Indian Railway Finance Corp, Food Corp of India, Hindustan Petroleum Corp Ltd, Axis Finance, Small Industries Development Bank Of India, National Highways Authority of India and REC were the most traded.
Investors are now eyeing fresh supply of primary issuances in the near future, dealers said.
On Friday, Union Bank of India has sought bids to raise up to 15 bln rupees through Basel-III compliant tier-I bonds.
Additionally, Power Finance Corp and Indian Railway Finance Corp plan to raise up to 11.8 bln rupees through bonds maturing in April 2032. The greenshoe amount for both issuances is reserved for Bharat Bond Exchange-Traded Funds.
Today, deals aggregating 42.70 bln rupees were reported on the National Stock Exchange against 34.87 bln rupees on Wednesday. BSE recorded deals worth 23.98 bln rupees compared with 22.74 bln rupees in the previous session.
UDAY BONDS
In the secondary market, Chhattisgarh’s Ujjwal DISCOM Assurance Yojana bond, aggregating to 8 mln rupees, was traded at a weighted average yield of 6.78%, data from the RBI’s Negotiated Dealing System – Order Matching System showed.
BENCHMARK LEVELS FOR CORPORATE BONDS:
End
Edited by Avishek Dutta
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Source: Cogencis
