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Informist, Monday, Sept. 28, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on corporate bonds ended marginally higher, tracking a rise in government bond yields, dealers said. Yields on government securities rose as Brent crude topped $108 per barrel and US Treasury yields climbed, they said. Crude prices rose as hopes of an imminent US-Iran agreement faded after US President Donald Trump rejected Iran's proposal to reopen the Strait of Hormuz. The rejection has revived concerns about supply disruptions through the Strait, heightening worries about global energy supplies.

 

Uncertainty on the global front and rate hike fears in the domestic market kept traders on the sidelines, which led to a fall in volumes till mid-day. "Right now, the market is in a dilemma...what happened on the corporate side today (Monday) was a ripple effect of the rise in government bond yields," a dealer at a state-owned bank said. "People are placing bets with major uncertainty in mind. The 10-year benchmark government bond yield started the day at 7.10% and went on higher and higher...look where it is trading now, somewhere near 7.19%. So, its spillover was seen in corporate bonds as people look at spreads to match that."

 

Investors are avoiding large bets on long-duration securities and selling low-yielding papers on expectations of a rate hike at the Reserve Bank of India's monetary policy meeting in October. The RBI policy meet will start on Oct. 5, with the outcome due on Oct. 7. 

 

The yield on three-year bonds issued by the National Bank for Agriculture and Rural Development was 7.87-7.88% Monday, against 7.84-7.86% Friday, while the indicative yield on NABARD's five-year bonds was 7.87-7.89%, marginally up from 7.85-7.88% Friday. The yield on the 10-year NABARD bond was at 7.90% Friday.

 

In the secondary market, overall deals worth INR 108.99 billion were recorded on the National Stock Exchange and BSE combined, down from INR 114.23 billion on Friday. Papers issued by Muthoot Fincorp, Hyderabad Metropolitan Development Authority, IIFL Finance, Bajaj Housing Finance, Bajaj Finance, Adani Enterprises, Small Industries Development Bank of India, and Lucina Land Development were actively traded. 

 

Dealers said the rise in yields was contained as some participants remained focused on primary market activity. They had initially sold bonds to accommodate fresh supply, which pushed yields higher, but later returned to buy in the secondary market after missing out in primary deals. In line with the usual pattern, mutual funds were active at the shorter end, buying in small quantities while selling in larger volumes. Banks and insurance companeies also sold bonds and pension funds largely stayed on the sidelines, they said.

 

In the primary market, a sharp increase in supply pushed participants to sell bonds in the secondary market, dealers said. On Monday, several large issuers tapped the corporate bond market, with bonds worth INR 107.85 billion, lower than INR 146.83 billion hitting the market on Friday. "Whenever there is high supply of good quality bonds, like those of state-owned or AAA-rated companies, people shift focus to those bonds, which leads to selling (in secondary market) to make room for fresh, higher-yielding supply," a fund manager at a mutual fund house said. 

 

Major issuances included those by Power Grid Corp. of India, which raised INR 20 billion through bonds maturing in 10 years at a coupon of 7.74%, while NIIF Infrastructure Finance raised INR 3.50 billion though two bonds. Other issuers included Nabkisan Finance, L&T Finance, and Mahindra And Mahindra Financial Services. 

 

Sagarmala Finance Corp. Ltd., India's first maritime lender, scrapped the country's first 'blue bond' issue, after investors sought high coupons. The state-owned institution had planned to raise up to INR 6 billion through the issue.

 

Dealers remain firm in their expectation that primary market supply will increase further ahead of the RBI's policy meeting, as non-banking financial companies and corporates across sectors rush to lock in funds before borrowing turns more expensive. "We expect companies to front-load funds to borrow cheaper capital compared to rates closer to the RBI MPC, where it is widely expected that the rate-setting panel will hike rates by 25 basis points," a dealer at a brokerage firm said. 

 

Companies across sectors will tap the corporate bond market on Tuesday to raise funds, with issuances worth over INR 104 billion lined up, dealers said. Delhi International Airport will tap the market to raise INR 35 billion thorugh 15-year bonds, and Vedanta has also invited bids to borrow up to INR 35 billion through three-year bonds. Prateek Realtors will issue bonds worth INR 6.17 billion. Other major issuers include Motilal Oswal Financial Services, Apollo Tyres, and Muthoot Fincorp.  

 

UDAY BONDS

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

 

ENCHMARK LEVELS FOR CORPORATE BONDS:

 

Tenure	Monday	Friday
Three-year	7.87-7.88%	7.84-7.86%
Five-year	7.87-7.89%	7.85-7.88%
10-year	7.90%	7.88%

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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