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Informist, Friday, Sept. 25, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Corporate bond yields ended little changed with an upward bias on Friday after rising significantly across tenures on Thursday, dealers said. Ahead of the weekend, traders were cautious and quoting higher coupons to protect against further rate hikes, but bets remained limited amid uncertainty on the global front, they said.

 

The broader surge in global yields is weighing on bonds maturing beyond three years, which are now being treated as long-term papers amid lack of clarity on the global environment. Investors are avoiding large bets on long-duration securities and offloading low-yielding papers amid expectations of a rate hike at the Reserve Bank of India's October monetary policy meeting, dealers said. However, a fall in Brent crude oil prices and US Treasury yields during the day capped the rise in corporate bond yields, dealers said.

 

"The market is fearful and the last few weekends have been eventful...people are uncertain about the rate trajectory due to uncertainty in the global environment and crude oil prices, which is making traders sceptical about taking large bets," a fund manager at a mutual fund house said. "That tussle will continue unless some major positive news comes from the global front."

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.84-7.86% Friday, against 7.82-7.85% Thursday, while the indicative yield on NABARD's five-year bonds was at 7.85-7.88%, broadly unchanged from 7.85-7.87% Thursday. The yield on 10-year NABARD bond was at 7.88% Friday.

 

A dealer said the rise in yields was capped as some participants focused on primary market activity. They had initially sold bonds to make room for fresh supply, which pushed yields higher, but later bought bonds in the secondary market after missing out on primary supply, with Small Industries Development Bank of India's auction being scrapped.

 

SIDBI scrapped its bond issue maturing on Dec. 10, 2029, after investors sought a higher coupon, dealers said. The state-owned institution had planned to raise up to INR 60 billion through the issue. According to bid books, SIDBI received 93 bids totalling INR 73.34 billion, with coupon bids ranging from 7.60% to 8.10%. While the base issue of INR 10 billion was priced at a coupon of 7.85%, the entire issuance, including the greenshoe option, was getting subscribed at a 7.97% coupon. Market participants had expected the cut-off on SIDBI's AAA-rated paper at 7.75-7.80%. 

 

In the secondary market, overall deals worth INR 114.23 billion were recorded on the National Stock Exchange and BSE combined, down from INR 142.76 billion on Thursday. Papers issued by IIFL Finance, Poonawalla Fincorp, Bajaj Housing Finance, Muthoot Fincorp, TVS Credit Services, Andhra Pradesh State Beverages Corp., and PNB Housing Finance were actively traded. 

 

In line with the usual trend, mutual funds were active at the shorter end of the curve, buying in small quantities and selling in larger volumes. Banks deployed excess funds in the three- to five-year maturity segment, while insurance companies and pension funds largely remained on the sidelines, dealers said.

 

In the primary market, a sharp increase in supply pushed participants to sell bonds in the secondary market to make room for higher-yielding fresh issuances, pushing yields higher, dealers said. On Friday, multiple issuers tapped the corporate bond market, with bonds worth INR 146.83 billion, significantly higher from INR 90 billion hitting the market on Thursday. Major issuances included those by Axis Max Life Insurance which raised INR 6.86 billion through bonds maturing in 10 years, while Aditya Birla Cap raised INR 5 billion though Sept. 2029 bond reissue. Other issuers included India Infradebt, Adani Airport Holdings, and JSW Energy.

 

Dealers expect primary market supply to increase further ahead of the RBI policy meeting as non-banking financial companies and corporates from various sectors rush to lock in funds before borrowing becomes expensive. "Issuers may front-load fundraising to secure cheaper capital compared to rates closer to the MPC meeting," a dealer at a private sector bank said. "If a rate hike happens, funds will become costly. Therefore, we are seeing companies rushing to raise funds to meet their month-end and working capital requirements."

 

Monday, issuances worth INR 114.85 billion will hit the maket. Power Grid Corp. of India plans to raise up to INR 50 billion through bonds maturing in 10 years. Sagarmala Finance Corp. is set to issue the country's first "blue bond" Monday and aims to raise up to INR 6 billion through the issue, including a base issue size of INR 1 billion and a greenshoe option of INR 5 billion through 10-year bonds. 

 

Mahindra and Mahindra Financial Services plans to raise INR 20 billion through three-year bonds, while Cube Highways Trust plans to raise up to INR 11.50 billion through four-year bonds. Other major issuers include Motilal Oswal Financial Services, L&T Finance, and Nabkisan Finance.  

 

UDAY BONDS

In the secondary market, no Ujwal DISCOM Assurance Yojana bondswere traded Friday, according to data on the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

 

BENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Friday	Thursday
Three-year	7.84-7.86%	7.82-7.85%
Five-year	7.85-7.88%	7.85-7.87%
10-year	7.88%	7.88%

 

End

 

Edited by Avishek Dutta

 

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